Yahoo Finance Competition watchdog confirms probe of Sainsbury's-Asda merger
The Competition and Markets Authority (CMA) is to move to a further in-depth investigation into the proposed merger between Sainsbury’s and Asda.
Earlier this year the CMA opened its Phase 1 investigation and have now opened a Phase 2 inquiry after confirming that the deal raises sufficient concerns.
The supermarkets are two of the largest grocery retailers in the UK, with stores overlapping in hundreds of local areas, the competition watchdog are concerned “shoppers could face higher prices or a worse quality of service”.
Other considerations relate to fuel, general merchandise and increasing ‘buyer power’ over suppliers.
The inquiry group aims to gather evidence through multiple customer surveys and engagement with other retailers, suppliers and industry bodies. Members of the public and other interested groups will also be invited to express their views.
News of the £15bn-plus merger emerged earlier this year in April, as Sainsbury’s chief executive Mike Coupe said grocery prices would fall in both chains as a result.
The companies have vowed to slash prices on everyday items by 10p and are targeting £500m worth of savings per year, the majority of which will come from negotiating better terms with suppliers.
Mr Coupe, who worked at Asda earlier in his career, also added that the deal would not lead to store closures or job losses.
“By creating the business we are talking about creating we will employ 330,000 people, secure the pensions of both groups of employees and create lots of opportunities for colleagues in the future," he said.
The combined business would give new the supermarket giant an estate of over 2,000 stores and place it ahead of current market leader and rival Tesco.
