Written by: Keith Tully
Published: 25th April 2019
Plans that would’ve seen two of the UK largest supermarket chains merged into a single business have been knocked back by regulators.
The Competition and Markets Authority (CMA) has made clear that it will not allow the merger to take place based on concerns about the potential impact the deal would have on consumers.
Specifically, the CMA has said that a merger of the two retail giants would lead to “increased prices in stores, online and at many petrol stations across the UK”.
In-depth assessments have been carried out over the past several months by the CMA to determine whether the merger deal between Sainsbury’s and Asda might have a damaging impact on competition in the supermarket sector and push up prices to consumers.
Statements reflecting its conclusions on those issues make clear that the CMA feels there is “no effective way of addressing our concerns, other than to block the merger”.
“It’s our responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week,” the chair of the CMA’s inquiry group, Stuart Mcintosh, said in a statement.
“Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers.”
Bosses of both Sainsbury’s and Asda have expressed their disappointment at the decision taken by the CMA.
Sainsbury’s chief executive Mike Coupe said that the CMA’s view that the merger would negatively impact consumers “ignores the dynamic and highly competitive nature of the UK grocery market”.
“The specific reason for wanting to merge was to lower prices for customers,” Mr Coupe said.
Roger Burley, Asda’s chief executive, said: “We were right to explore the potential merger with Sainsbury’s, which would have delivered great benefits for customers and supported the long term, sustainable success of our business.
“We’re disappointed with their findings but will continue to find ways to put money back into customers’ pockets and deliver great quality and service in an ever changing and demanding market.”
Sainsbury’s and Asda had been insisting that their merger would result in £1 billion worth of cost savings to consumers and they had also committed to selling off more than a hundred of their UK stores if it would help get their plans approved by regulators.