1. News
April 25, 2019

CMA blocks Sainsbury’s and Asda merger over high price concerns

The Competition and Markets Authority (CMA) has blocked the proposed £7bn Sainsbury’s and Asda merger, claiming that it could reduce competition at a national and local level for consumers. 

The Competition and Markets Authority (CMA) has blocked the proposed £7bn Sainsbury’s and Asda merger, claiming that it could reduce competition at a national and local level for consumers.

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A group of independent CMA panel members has made the decision following a review of various issues including increased competition concerns raised by Lidl and Aldi.

The final report published by the UK’s competition watchdog noted that the merger would affect British shoppers and motorists as it could lead to price rises in stores, online and at petrol stations across the country.

The merger would reduce the quality and range of products and services, as well as offer a poorer overall shopping experience.

In addition, it would lead to motorists paying more at over 125 Sainsbury’s and Asda petrol stations.

CMA inquiry group chair Stuart McIntosh said: “It’s our responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week.

“It’s our responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week.”

“Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers.

“We have concluded that there is no effective way of addressing our concerns, other than to block the merger.”

In addition, the panel reviewed the companies’ plans to offer £1bn price cuts relating to the merger, and identified that it is more likely to lead to price rises than price cuts.

In March this year, Sainsbury’s and Asda proposed to sell up to 150 supermarkets and 38 petrol stations in a bid to persuade the CMA to secure their merger.

Welcoming the CMA’s decision, the trade union for Asda workers, GMB general secretary Tim Roache said: “For Asda workers, this is the right decision after the CMA’s provisional findings. Swathes of stores and depots would have to have been sold off, with jobs put at risk and no real benefit for customers or communities.

“The workforce has been through months of uncertainty, worrying about what’s going to happen and wondering if their stores or depots would be sold from under them.”

Free Report
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What’s missing from your IPO industry assessment?

IPO activity all but stopped in 2020, as the investment community grew wary of the effects of COVID-19 on economies. No matter how deserving a business was of flotation, momentum was halted by concerns of when a ‘new normal’ of working patterns and trade would set in. Recently, sentiment has changed. Flotations picked up again during the second half of 2021, and now in 2022 the mood is decidedly optimistic. Business leaders have their eyes on fast rebounding economies, buoyant market indices and the opportunity once again to take their businesses public. As a result, global IPOs are expected to hit back this year. With GlobalData’s new whitepaper, ‘IPOs in Consumer and Retail: 5 must-include elements for your prospectus industry report’, you can explore exactly what is needed in the essential literature. GlobalData’s focus lies in the critical areas to get right:
  • Macroeconomic and demographic environment
  • Consumer context
  • Industry environment
  • Competitive environment
  • Route to market
Interested to learn more about what to include in your IPO Industry Assessment report? Download our free whitepaper.
by GlobalData
Enter your details here to receive your free Report.