Competition regulators are taking a look at the retailer’s planned takeover amid competition concerns.
The Competition and Markets Authority (CMA) informed Home Retail Group and the retailer of its decision on Friday. The move could potentially jeopardise the £1.4bn deal.
Its initial assessment will consider comments on the tie-up over the coming fortnight before the first phase of the investigation kicks in. The watchdog said it must decide by 25th July whether the case then warrants a full probe, which could delay the deal’s expected completion.
The CMA said it must determine whether Sainsbury’s plans are likely to result in a “substantial lessening of competition within any market or markets in the UK for goods or services”.
The deal, as it stands, would create a £6bn non-food operation. The retailer has said it plans to relocate many Argos stores within under-occupied space in its supermarkets, threatening the closure of up to 200 sites. Sainsbury’s has not confirmed the number of sites that will close but says that after the takeover there will be more than 2,000 sites including concessions within “click and collect” points as well as stores.
The deal, once approved, is expected to deliver annual savings of £160m once completed and result in some job losses.
In response to CMA’s decision, Sainsbury’s commented: “We are pleased that the CMA review process into Sainsbury’s proposed offer to buy Home Retail Group is progressing. The combination of both businesses will create a multi-product, multi-channel proposition with fast delivery networks, benefiting customers by accelerating our strategy to give them what they want, where and when they want it. We look forward to the successful completion of the deal.”