CMA blocks Sainsbury’s-Asda merger

The Competition and Markets Authority (CMA) has blocked the Sainsbury’s-Asda merger after finding it would lead to “increased prices in stores, online and at many petrol stations across the UK”. The merger was said to be worth around £12bn and would have seen the grocer’s leapfrog Tesco as the country’s largest supermarket. However, in its final report published today the CMA found that UK shoppers and motorists would be “worse off” if Sainsbury’s and Asda were to merge. Following an in-depth investigation, a group of independent CMA panel members concluded that the deal would result in a “substantial lessening” of competition at both a national and local level for people shopping in supermarkets. Stuart McIntosh, chair of the inquiry group, said: “It’s our responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week. 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. “We have concluded that there is no effective way of addressing our concerns, other than to block the merger.” The CMA’s investigation found that, as well as affecting in-store customers, the merger would result in increased prices and reduced quality of service, such as fewer delivery options, when shopping online. Furthermore, it would lead to motorists paying more at over 125 locations where Sainsbury’s and Asda petrol stations are located close together. In making the decision to prohibit the merger, the group reviewed a wide range of issues in detail, such as the increased competition presented by discount stores like Lidl and Aldi, and how new or expanding competitors could affect the retail market, including online. The group also carefully reviewed the companies’ statement they would cut some prices. However, it said detailed analysis of the impact of the deal “clearly showed” the merger would reduce competition in the market and is more likely to lead to price rises than price cuts. As a result, Sainsbury's, Walmart and Asda said they have “mutually agreed” to terminate the transaction. Sainsbury's CEO, Mike Coupe, said that due to the decision the CMA is “effectively taking £1bn out of customers pockets”. He said: "The specific reason for wanting to merge was to lower prices for customers. The CMA's conclusion that we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market. The CMA is today effectively taking £1bn out of customers' pockets. "Sainsbury's is a great business and I am confident in our strategy. We are focused on offering our customers great quality, value and service and making shopping with us as convenient as possible." Asda CEO, Roger Burnley, added: “Asda’s DNA is delivering low prices for hard working families and that will never change. 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 customer’s pockets and deliver great quality and service in an ever changing and demanding market. "I have always been hugely aware that the last year has been an unsettling time for all of our colleagues and am immensely grateful for their commitment and dedication during that time. Our focus is now on the most important job we all have – delivering for our customers.”

CMA blocks Sainsbury’s-Asda merger

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