Sainsbury's, Asda mega merger blocked by CMA

Sainsbury's, Asda mega merger blocked by CMA

Sainsbury's and Asda have ditched their planned £13 billion merger after it was blocked by the Competition & Markets Authority (CMA), with the regulator saying it would lead to higher prices in stores, online and at many petrol stations across the UK.

The two grocery giants argued that their combined buying power would leave customers better off. They also offered to sell 150 of their stores to address concerns about weaker competition.

But Stuart McIntosh, Chair of the inquiry group, said today: “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.”

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Catherine Shuttleworth, CEO and Founder, Savvy Marketing, said: “The CMA say that they have looked at the changed dynamic of the marketplace which makes it all the more surprising that they really think prices would go up. So back to the drawing board for both parties, with neither side sounding happy at the outcome. Let’s now see what the law of unintended consequences could bring to the grocery market.”

Comments by McIntosh that it would be difficult to track prices post the proposed merger are completely unbelievable, she claimed. “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.”

The GMB union, which represents Asda workers, welcomed the move, however. Tim Roache, GMB General Secretary, commented: "Swathes of stores and depots would have to have been sold off, with jobs put at risk and no real benefit for customers or communities.”

"The workforce has been through months of uncertainty, worrying about what’s going to happen and wondering if their stores or depots would be sold from under them. It’s time for Asda to move on, and to give some stability and security to the staff who work day in, day out to make the company profitable,” he concluded.

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