A putative merger between two of Britain’s big six supermarket giants has been thrown into doubt after the UK competition regulator declared that it had ‘extensive concerns’ about the tie-up.
Sainsbury’s had been due to takeover its erstwhile rival Asda but a detailed investigation by the Competition and Markets Authority (CMA) has raised fears that this could undermine competition in stores, online and on petrol forecourts.
In response the CMA is calling for the proposed tie-up to be binned or, at the very least, some form of divestment arrangement where both sides sell off crucial assets to others – although it concedes this latter solution may be ‘ineffective’.
CMA chair Stuart McIntosh said: “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. We also have concerns that prices could rise at a large number of their petrol stations.”
In a joint retort both Sainsbury’s and Asda rejected these claims out of hand, pledging that they would pass on any economies of scale direct to consumers.
A deadline of 13 March has been set for responses to the CMA’s findings with a final report following by 30 April.
Merger talks between the pair were first instigated in the spring of last year.