CMA may allow Asda/Sainsbury's merger despite a squeeze on suppliers

Yesterday, the Competition and Markets Authority (CMA) launched an investigation into a proposed merger between Sainsbury’s and Asda.

There is a decent chance the CMA will let Asda and Sainsbury’s merge despite the concern that it will allow the larger combined business to squeeze suppliers for lower prices.

The issue for suppliers is less about the prospect of being ‘squeezed’ and more about the fact that a lot of suppliers offer the two businesses different prices. Some suppliers will be making more money off Sainsbury’s than they are Asda for instance.

But once the combined business sees the supplier prices for both Asda and Sainsbury’s, the prices will be aligned to the lower price. That is the issue suppliers are facing and it will, ultimately, mean the suppliers will make less money.

Read Mark’s comments about the CMA investigation into Sainsbury’s/Asda on The Telegraph.