UK CMA launched the first phase investigation into Sainsbury and Asda merger. Credit: Simon Johnston..

The UK Competition and Markets Authority (CMA) has launched the first phase of a formal investigation into the proposed merger of British retail giants J Sainsbury and Asda Group.

As part of the investigation, CMA will conduct a detailed assessment into how the deal could affect competition for UK shoppers.

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The proposed merger between Sainsbury and Asda was announced on 30 April and CMA has been gathering information required to begin the investigation.

CMA chief executive Andrea Coscelli said: “About £190bn is spent each year on food and groceries in the UK so it’s vital to find out if the millions of people who shop in supermarkets could lose out as a result of this deal.”

The CMA’s investigation will also consider various factors such as fewer product choices, higher prices and worse quality services that may result from this deal.

“The CMA expects to accept this request unless it receives any valid objections to the use of the fast-track process.”

CMA will also look into whether the merged company could use its increased buyer power to squeeze suppliers, which might have potential knock-on effects for shoppers.

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Coscelli added: “In most merger cases, a full Phase I investigation is needed to determine whether a deal can be cleared or whether further scrutiny is required. However, merging companies can ask for the CMA’s review of the deal to be moved more quickly to Phase II where it is clear from an early stage that the deal requires an in-depth investigation.

“The CMA expects to accept this request unless it receives any valid objections to the use of the fast-track process.

“The CMA is now inviting views by 31 August on how the merger could affect competition. This follows the preliminary invitation to comment launched at the start of the information gathering period. Further opportunities to submit views will also be provided during the Phase II investigation.”