The Competition and Markets Authority has dropped a bombshell in the merger talks.
The proposed merger between Sainsbury’s and Asda would create Britain’s biggest supermarket, but the Competition and Markets Authority (CMA) has said it is “likely to be difficult for the companies to address the concerns it has identified”.
The regulator found a litany of concerns, including a worse experience in stores and online, a reduction in the choice available to consumers and higher prices at petrol stations.
In a statement the CMA said: “The CMA has provisionally found extensive competition concerns as part of its in-depth investigation of the proposed merger between Sainsbury’s and Asda.”
The regulator, led by former MP Andrew Tyrie, has laid out some limited options for the supermarkets to go forward: “The CMA has set out potential options for addressing its provisional concerns. These include blocking the deal or requiring the merging companies to sell off a significant number of stores and other assets – potentially including one of the Sainsbury’s or Asda brands – to recreate the competitive rivalry lost through the merger.”
Despite the findings, spokespersons from both supermarkets have said they will continue to fight for the merger to go ahead. A joint statement reads: “These findings fundamentally misunderstand how people shop in the UK today and the intensity of competition in the grocery market. The CMA has moved the goalposts and its analysis is inconsistent with comparable cases. Combining Sainsbury’s and Asda would create significant cost savings, which would allow us to lower prices. Despite the savings being independently reviewed by two separate industry specialists, the CMA has chosen to discount them as benefits.”
“We are surprised that the CMA would choose to reject the opportunity to put money directly into customers’ pockets, particularly at this time of economic uncertainty. We will be working to understand the rationale behind these findings and will continue to press our case in the coming weeks.”