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Sainsbury's and ASDA Blocked from Merging For Ten Years

Sainsbury's Argos Asda Habitat 725 x 500.jpg

The CMA has prevented supermarket chains Sainsbury's and ASDA from attempting to merge for a ten-year period.

Unless prior permission is granted by the CMA, the two supermarkets cannot attempt to merge until after 8th July 2029.

In August 2018, the Competition and Markets Authority (CMA) opened its initial (Phase 1) investigation into the planned merger and announced that Sainsbury's and ASDA had requested a ‘fast-track’ referral to Phase 2.

The merger was finally blocked in April 2019, with the CMA stating that: 

"The CMA’s investigation found that, as well as affecting in-store customers, the merger would result in increased prices and reduced quality of service, such as fewer delivery options, when shopping online. Furthermore, it would lead to motorists paying more at over 125 locations where Sainsbury’s and Asda petrol stations are located close together.

"In making the decision to prohibit the merger, the Group reviewed a wide range of issues in detail, such as the increased competition presented by discount stores like Lidl and Aldi, and how new or expanding competitors could affect the retail market, including online. Whilst the panel carefully considered these industry developments, they did not allay its serious competition concerns about the merger.

"The Group also carefully reviewed the companies’ statement they would cut some prices. However, detailed analysis of the impact of the deal clearly showed that, overall, the merger would reduce competition in the market and is more likely to lead to price rises than price cuts.

"This final decision to block the deal follows the publication of the CMA’s provisional findings and a subsequent consultation period, during which the CMA reviewed responses from a variety of interested parties, including Sainsbury’s and Asda themselves."

Source : Insight DIY Team

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11 July 2019

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