CMA has 'extensive concerns' over Sainsbury's-Asda merger

Keiligh Baker's picture

The competition regulator has said that Sainsbury's planned £7billion takeover of Asda should either be blocked or require the sale of a significant number of stores - or even one of the brands.

The Competition and Markets Authority (CMA) said it would be “difficult for the companies to address the concerns it has identified” so far in its probe into the deal.

In its provisional findings, the CMA said the deal could lead to a worse experience for in-store and online shoppers through higher prices, a poorer shopping experience and reductions in the range and quality of products offered. It also had concerns that prices could rise at a large number of Sainsbury's and Asda petrol stations.

Stuart McIntosh, chairman of the independent inquiry group carrying out the CMA investigation, said: “These are two of the biggest supermarkets in the UK, with millions of people purchasing their products and services every day.

“We have provisionally found that, should the two merge, shoppers could face higher prices, reduced quality and choice, and a poorer overall shopping experience across the UK.”

Sainsbury's said it fundamentally disagreed with the findings."The CMA has moved the goalposts and its analysis is inconsistent with comparable cases," it said in a statement. "We will be working to understand the rationale behind these findings and will continue to make our case in the coming weeks."

The spokesman added: “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."

Sainsbury’s and Asda unveiled their £12 billion merger plan last April. It would create a retail titan with a bigger share of the market than Tesco.

The CMA will publish its final report by April 30, having recently extended the original deadline by almost two months.