Yahoo Finance Sainsbury’s and Asda challenge CMA over merger
Sainsbury’s and Asda have launched a legal challenge after complaining they are unable to meet the deadlines of the competition watchdog investigating their planned £7.3bn merger.
The deal, which was announced in April, promises to create a new force in UK supermarket retailing that would usurp Tesco as the market leader.
The Competition and Markets Authority (CMA) is investigating the potential effects of the dealon shoppers and suppliers.
The two supermarkets have applied for a judicial review of the CMA investigation into their proposed tie-up, after it refused to give them extra time over Christmas to “respond to a large amount of material recently provided to us”.
In a joint statement, Sainsbury’s and Asda said: “This is a case of unprecedented size and complexity and we have a responsibility to our customers and colleagues to ensure that we and the CMA have enough time to make and consider all the facts and evidence.”
The retailers want a review of the timetable. As it stands the CMA expects to issue its provisional findings early next year before a final report in March.
The CMA indicated that it would be willing to defend its position in court: “Our first priority in this investigation has, and will continue to be, assessing if shoppers would face higher prices or a lower quality of service as a result of the merger and, if so, to prevent that from happening.”
The competition watchdog said it was “not unusual” for firms under investigation to have to assess a large volume of material in a short timeframe, and the timeline was typical for one of its investigations. “If we gave the companies the extra time they are now asking for, it would put our ability to complete the investigation by the required deadline at very serious risk,” the CMA added.
Tesco has said the deal should not be cleared without “extensive remedies”, while Morrisons, the UK’s fourth largest supermarket, has raised concerns about the merger giving the combined company an “effective duopoly” controlling in excess of 60% of the market.
