Competition Watchdog to Investigate Proposed Sainsbury’s, Asda Merger

The Competition and Markets Authority (CMA) has launched a formal investigation into the proposed merger of the supermarket giants Sainsbury’s and Asda.

Combining the two businesses would create an operation accounting for close to one third of the UK’s entire grocery retail sector and the competition watchdog is responsible for ensuring that the deal would not have a directly negative impact on consumers.

Concerns have been raised that the merging of the two supermarket giants could add to the financial pressures felt by smaller companies within their supply chains.

The CMA has said that it has been gathering as much relevant information as it might need about the two businesses and their plans since the merger deal was first proposed earlier this year.

Issues to be assessed by the regulator include whether the merger will lead to diminished consumer choice, higher prices and generally lower standards of service.

It’s also been noted that while Sainsbury’s and Asda are leading grocery retailers, they also sell fuel, electrical items, toys and clothing on a very considerable scale across the UK and a total of almost 3,000 outlets.

Potential impacts on suppliers of what would be a massively enlarged joint Sainsbury’s/Asda operation are also to be considered in depth by the CMA as part of its investigations.

“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,” explained the CMA’s chief executive Andrea Coscelli.

“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.”

Relevant parties have until August 31st to communicate to the CMA their views on what potential impact the proposed merger could have on competition in the UK’s supermarket and grocery retail sector.