An ambitious hookup between two of Britain’s largest supermarket chains; Sainsbury’s and Asda, lies in tatters after the Competitions and Markets Authority (CMA) came out against the merger on the grounds that it would increase costs for consumers.
The brick wall didn't come as a complete surprise but has forced Sainsbury’s, Asda and its US parent Walmart to reluctantly abandon their efforts to push the deal through; despite having flatly contradicted the CMA’s pricing claim.
Sainsbury's chief executive, Mike Coupe, 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 £1 billion out of customers' pockets.”
The decision came as no less of a shock to independent analysts with Catherine Shuttleworth, chief executive at Savvy, noting: “The comment from Stuart McIntosh of the CMA this morning - that it would be difficult to track prices post the proposed merger - is completely unbelievable. It has never been easier to track supermarket prices.
"Additionally, Sainsbury's had committed to a transparent audit of pricing by a third party post any merger. The more we hear from the CMA the more we should be concerned that they are not working in the best interests of consumers and clearly do not understand the market dynamics of the UK grocery sector.”
In recent years Britain’s supermarket sector has been rocked by the arrival of German discount grocers Aldi and Lidl which have steadily eroded custom from the ‘big four’ of Tesco, Asda, Sainsbury’s and Morrisons.