Written by: Keith Tully
Published: 20th February 2019
The proposed merger of two of the UK’s largest retailers has been thrown into jeopardy with the Competition and Markets Authority (CMA) raising significant concerns about the potential impact the deal could have on the supermarket sector.
Plans for a merger of Sainsbury’s and Asda were revealed in the first half of 2018 but those intentions could be thwarted by the CMA, which is worried that the deal will hinder competition and customer experiences both in stores and online.
The authority has been conducting an in-depth investigation into the potential impact of the merger and revealed that it has “extensive competition concerns”.
Among the concerns raised is the idea that the deal will result in increased prices for consumers and have a negative impact on the “range and quality of products offered” by a merged Sainsbury’s and Asda operation.
“These are two of the biggest supermarkets in the UK, with millions of people purchasing their products and services every day,” said Stuart McIntosh, chair of the independent inquiry group carrying out the CMA’s investigation.
“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.”
Another worry highlighted by the CMA is that the merging of Sainsbury’s and Asda could lead to prices for fuel rising at a large number of petrol stations across the country.
A final decision on whether the proposed merger of the two supermarket giants will ultimately be allowed to happen or not is yet to be made.
The two companies involved will now be given the opportunity to explain how they can ensure that their proposed merger will not compromise competition or have a negative effect on consumer experiences within the supermarket sector.
A number of strategies that could help offset competition concerns have been suggested by the CMA, with the authority putting forward the idea that Sainsbury’s and Asda might sell off a significant number of their stores and potentially some of their brands.
However, the authority has also said in a statement: “The CMA’s current view is that it is likely to be difficult for the companies to address the concerns it has identified.”
There are a total of close to 3,000 stores operated either by Sainsbury’s or Asda in the UK, with the two supermarket chains employing a combined total of more than 300,000 people nationwide.