Sainsbury’s and Asda’s proposed £12bn merger under investigation by competition watchdog over fears of higher prices for shoppers and squeeze on suppliers
- The CMA has officially launched its ‘phase 1’ probe into the deal
- The supermarket giants have asked the CMA to move quickly to the next phase
The UK’s competition watchdog has kicked off its formal probe into how the proposed merger between Sainsbury’s and Asda could affect customers, prices and local areas.
Ahead of the proposed £12billion merger, the Competition and Markets Authority said it will determine whether the deal would lead to less choice for consumers, higher prices and worse quality services.
The CMA’s ‘phase 1’ investigation will also look at whether the merged company could use its increased buying power to ‘squeeze suppliers’ and whether this could have potential knock-on effects for shoppers.
Probe: The UK’s competition watchdog has kicked off its formal probe into the Sainsbury’s/Asda merger
Sainsbury’s and Asda have gone on record saying that suppliers will bear the brunt of a pledge to bring down the price of everyday products following their union.
As a merged entity, Sainsbury’s and Asda are looking to save at least £500million, £350million of which would come from savings when buying from suppliers.
Andrea Coscelli, chief executive of the CMA, said: ‘About £190 billion is spent each year on food and groceries in the UK so it’s vital to find out if the millions of people who shop in supermarkets could lose out as a result of this deal.
‘We will carry out a thorough investigation to find out if this merger could lead to higher prices or a worse quality of service for shoppers and will not allow it to go ahead unless any concerns we find are fully dealt with.’
As well as being major retailers of groceries, both in-store and online, Sainsbury’s and Asda also compete to sell goods such as fuel, electricals, toys and clothing.
The supermarket giants first announced their plans to merge on 30 April. On 18 May, the CMA published its first invitation to comment on the proposed deal, ahead of today’s launch of phase 1 of its formal probe. The CMA’s latest request for comments closes on 31 August.
Sainsbury’s and Asda have asked the CMA to move ‘more quickly’ to the in-depth phase 2 part of the inquiry through a ‘fast-track’ process, the competition watchdog said.
According to data published by Kantar Worldpanel in June, Sainsbury’s sales fell by 0.2 per cent in the three months to 17 June.
Sainsbury’s performance contrasts with its future partner Asda which notched up growth of 1.8 per cent, Kantar said.
Shares in Sainsbury’s are down 0.53 per cent to 339.70p.
Pushing ahead: Sainsbury’s and Asda have asked the CMA to move ‘more quickly’ to the in-depth phase 2 part of the inquiry