The Competition Markets Authority (CMA) has found that the proposed merger of Sainsbury’s and Asda could increase prices and reduce quality for consumers.
CMA found that the proposed deal could lead to worse experiences for in-store and online shoppers across the UK, including higher prices, a poorer shopping experience and reductions in the range and quality of products offered.
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The authority said it has concerns that the merger could lead to a substantial lessening of competition at both national and local level. This could mean that shoppers lose out across the UK and the deal could also cost them through reduced competition in particular areas where Sainsbury’s and Asda stores overlap.
Chair of the independent inquiry group carrying out the investigation said: “These are two of the biggest supermarkets in the UK, with millions of people purchasing their products and services every day. We have provisionally found that, should the two merge, shopper 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.
“These are our provisional findings, however, and the companies and others now have the opportunity to respond to the analysis we’ve set out today. It’s our responsibility to carry out a thorough assessment of the deal to make sure that the sector remains competitive and shoppers done lose out.”
The CMA has set out potential options to address its provisional concerns. The provisions include blocking the deal or requiring the merging companies to sell off a significant number of stores and other assets – potentially including one of the Sainsbury’s or Asda brands – to recreate the competitive rivalry lost through the merger.
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By GlobalDataCMA’s current view is that it is likely to be difficult for the companies to address the concerns it has identified.
