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Sainsbury and Asda cancel merger plans after CMA report

Christian Fernsby ▼ | April 25, 2019
The Competition and Markets Authority (CMA) has published its Final Report on the proposed merger of J Sainsbury and Asda Group resulting in prohibition of the merger.
Asda
Britain   Sainsbury's, Walmart and Asda have mutually agreed to terminate the transac
As a result, Sainsbury's, Walmart and Asda have mutually agreed to terminate the transaction.

The Competition and Markets Authority (CMA) found that UK shoppers and motorists would be worse off if Sainsbury’s and Asda were to merge.[break]


"This is due to expected price rises, reductions in the quality and range of products available, or a poorer overall shopping experience," The Competition and Markets Authority said.

"Following an in-depth investigation, a group of independent CMA panel members concluded that the deal would result in a substantial lessening of competition at both a national and local level for people shopping in supermarkets.

"This would mean shoppers right across the UK would be affected, not just in the areas where Sainsbury’s and Asda stores overlap.

"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."

Sainsbury's CEO, Mike Coupe, said: "The specific reason for wanting to merge was to lower prices for customers.

"The CMA's conclusion that we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market.

"The CMA is effectively taking £1 billion out of customers' pockets.

"Sainsbury's is a great business and I am confident in our strategy.

We are focused on offering our customers great quality, value and service and making shopping with us as convenient as possible."


 

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