CMA puts Asda and Sainsbury’s merger in doubt

The Competition and Markets Authority (CMA) this week put the planned £10bn merger of supermarket giants Asda and Sainsbury’s in doubt due to a ‘catalogue of concerns’, including higher prices and reduced quality and choice for customers.

Here’s the response from Andy Brian, our partner and head of retail:

“There have been concerns over this deal since Asda and Sainsbury’s first shocked the industry by announcing that they were planning to merge.

“The CMA has said that it could lead to higher prices and a poorer experience for shoppers. When the proposed merger was first announced, it was speculated that the larger combined business would squeeze suppliers for lower prices, at the very least by way of price alignment, and the CMA are seemingly sufficiently concerned that the benefit of those lower prices would not be passed on to shoppers.

“The deal is not dead in the water, but the CMA’s statement refers to the possibility of requiring store disposals – or even a disposal of one of the two brands – as a pre-condition to any approval.  Neither of those measures were envisaged by the parties at the outset – certainly not publicly.

“I said at the time that I expected that stores would have to close, and it has already been suggested that jobs may need to be cut if the merger goes through. Sadly, I would expect that job losses would happen if the merger were blocked.  Either way this would be another huge blow for the retail industry.”