Sainsbury’s-Asda deal to be subjected to an in-depth competition investigation

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( via – – Wed, 19th Sept 2018) London, Uk – –

The £15bn merger between supermarkets Sainsbury's and Asda is to be subjected to an in-depth competition investigation, it has been announced.

The Competition and Markets Authority said the deal “raises sufficient concerns to be referred for a more in-depth review”.

The CMA undertook an initial review of the deal, which would create a business taking £1 in every £3 spent on groceries.

The chains say prices will fall.

But the CMA said: “The companies are two of the largest grocery retailers in the UK and their stores overlap in hundreds of local areas, where shoppers could face higher prices or worse quality of service.”

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The competition body said it would also look at issues relating to fuel, general merchandise such as clothing and what it describes as “increased buyer power over suppliers”.

It has been calculated that the deal, announced in April, between the UK's second and third-largest supermarkets would create the UK's biggest retail chain with a 31.4% market share and with 2,800 stores.

Analysis by retail property experts Maximise UK has estimated that the CMA will recommend that 6%, or 73, of the combined group's supermarkets should be sold off. Others have speculated that up to 300 sites could have to be divested.

Suppliers have also said they could suffer as a result of the merger, which comes at time when supermarkets are facing pressure from discounters.

The CMA investigation was announced as rival Tesco, the biggest supermarket, prepared to unveil its new Jack's discount chain.

Asda and Sainsbury's had asked the CMA to “fast track” the first stage of its inquiry, which began in August.