- Government’s Business and Environment bodies have written to the CMA
- They are concerned about market dominance, prices and choice
- CMA has already said the deal is ‘likely’ to be reviewed by them in future
Two parliamentary committees have written a letter to the Competition and Markets Authority voicing concerns over the potential impact of the deal on prices, choice and fairness for shoppers and suppliers.
The government’s Business and Environment committees are also concerned about the dominance the merged duo and Tesco would have in the market.
‘Local monopolies’ with numerous Asda and Sainsbury’s stores peppered across small areas are a real concern, the parliamentary bodies said.
Concerns: Two parliamentary committees have written a letter to the Competition and Markets Authority voicing concerns over the potential impact of the deal
On top of concerns over market dominance, the letter said price promises for consumers could result in suppliers seeing their margins squeezed even further.
Neil Parish, chair of the Environment, Food and Rural Affairs Committee, said: ‘Grocery retailers don’t have a gleaming record of treating suppliers well and the Groceries Code Adjudicator’s 2017 survey found that Asda was the worst grocery retailer in the eyes of its suppliers.
‘The cost savings being promised through this merger must not come through squeezing those further down the supply chain.
‘I am also concerned that with two supermarkets taking up around 60% of the market, suppliers would be more reluctant to raise complaints about unfair practices.’
Suppliers squeezed: The letter said price promises for consumers could result in suppliers seeing their margins squeezed even further
Business committee chair Rachel Reeves said: ‘This merger threatens customer choice, hands yet more power to mighty supermarket players and heaps more pressure on small and medium suppliers.
‘The CMA needs to be a champion of consumers and it must look closely at the impact of this merger on the supply chain as well as the effect on competition in the supermarket sector.’
A merger between the duo will create a supermarket titan bigger than Tesco with revenues of £51billion and a network of 2,800 Sainsbury’s, Asda and Argos stores.
The CMA has already said the deal is ‘likely to be subject to review.’
Sainsbury’s boss, Mike Coupe has promised that prices on everyday items would be cut by around 10 per cent if the deal goes ahead.
He said there are no plans for store closures, with the duo being kept as separate brands.
Sainsbury’s share price is down 0.70 per cent or 2.15p to 302.85p.
Price promise: Sainsbury’s boss, Mike Coupe has promised that prices on everyday items would be cut by around 10 per cent if the deal goes ahead