1. News
March 25, 2019

Sainsbury’s and Asda propose to sell 150 supermarkets to save merger

UK supermarket chains Sainsbury's and Asda have proposed to sell up to 150 supermarkets and 38 petrol stations in a bid to persuade the Competition and Markets Authority (CMA) to secure their £7bn merger.

UK supermarket chains Sainsbury’s and Asda have proposed to sell up to 150 supermarkets and 38 petrol stations in a bid to persuade the Competition and Markets Authority (CMA) to secure their £7bn merger.

The stores are equivalent to just half the number of the total stores proposed by the CMA to be closed to go ahead with the merger, according to The Guardian.

The competition watchdog intends to block the merger or urge the retailers to sell one of the supermarket brand names.

Sainsbury’s CEO Mike Coupe and Asda CEO Roger Burnley said: “We have asked the CMA to correct significant errors in its provisional findings. Its analysis fundamentally misunderstands how people shop today as well as ignores the intensity of competition and the dynamism of the UK grocery market, which evolves on an almost weekly basis.

“We have committed to £1bn of lower prices for customers within three years of our businesses merging and proposed a remedy package that would satisfy any reasonable concerns. We urge the CMA to properly reflect the evidence so that we can deliver savings for customers.

“We regret the uncertainty this process causes for our colleagues and want to reassure them that no stores would close because of this merger, with any divested stores run by a credible third party.”

“I believe that the competition authority is likely to demand a higher number of stores than 150 to keep stability and growth in the market.”

Sainsbury’s and Asda announced earlier this month, plans to offer £1bn price cuts annually by the third year, post-completion of their merger in response to the CMA’s opposition to the merger.

jisp CEO Julian Fisher said: “The news suggesting that the Sainsbury’s/ Asda merger will have a large impact on the market and that it will lead to an increase in price and fall in product quality is a complete over exaggeration. The grocery market is performing at its best where product, price and quality is concerned as the market is maintaining competition.

“This being largely thanks to the German stores, Aldi and Lidl introducing the popularity of a wider selection of products imported from other countries at great prices.”

Fisher continued: “As consumers we now tend to shop in more than one store to remain loyal to the major product brands and to shop around for the best price for these. This merger is not likely to have a detrimental impact upon consumer choice as the market is quick to adapt.

“I believe that the competition authority is likely to demand a higher number of stores than 150 to keep stability and growth in the market.

“Supermarkets can allow themselves to stand out by ensuring they offer something better than their competitors. They should be focusing on convenience for customers and how they can provide a service that allows shoppers to have the best experience. For example, the recent news on the introduction of Amazon Go stores in the UK to use technology to allow shoppers to pay via their mobile phones and avoid queueing,” concluded Fisher.

Enhanced by Deborah Williams