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May 21, 2018updated 22 May 2018 12:33pm

UK competition watchdog to probe Sainsbury’s-Asda merger proposal

UK's competition watchdog has confirmed its plans to probe into the proposed merger of two supermarket majors in the UK - Sainsbury's and Asda.

UK’s competition watchdog has confirmed its plans to probe into the proposed merger of two supermarket majors in the UK – Sainsbury’s and Asda.

The firm has sought comments on the transaction from all the interested parties.

Competition and Market Authority (CMA) plans to investigate whether the proposed merger could lead to market monopoly in the UK for goods or services.

In April, the two supermarkets announced their plan to merge, however, this announcement has led to some concerns from regulatory authorities and politicians.

According to CMA, its invitation seeking comments is the initial phase of the information-collecting process before launching a probe.

In the weeks to come, the watchdog is likely to be in touch with suppliers, competitors, industry bodies and consumer organisations.

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The watchdog has kept 4 June as its deadline for its initial information-collecting process.

“The deal is not expected to see any store closures and is likely to lead to operational savings of £500m.”

Once the first phase of the formal investigation is complete, the watchdog will decide if it needs to move to phase two of the probe.

Labour MP and chair of the Business, Energy and Industrial Strategy committee Rachel Reeves said: “The CMA is right to investigate this potential merger between two powerful supermarket players. It’s vital that the CMA examines closely the impact on consumer choice and jobs.

“It’s also important that the effects on the supply chain are looked at as small suppliers to supermarkets are already under pressure on prices.”

Leeds-based Asda is valued at around £7.3bn and US owner Walmart paid £3bn to buy 42% interest in the merged entity.

The deal is not expected to see any store closures and is likely to lead to operational savings of £500m.

According to the firms, customers will benefit from the deal as there would be price cuts of 10% on many of the products that are regularly purchased.

The companies plan to maintain both the brands post-transaction.