20th Feb 2019 07:27
LONDON (Alliance News) - The UK Competition & Markets Authority on Tuesday proposed blocking the merger between supermarkets J Sainsbury PLC and Walmart Inc-owned Asda after highlighting "extensive competition concerns" arising from the tie-up.
The anti-monopoly regulator, in the provisional findings of its in-depth investigation into the effects of the merger, found that the deal could lead to a worse experience for customers though higher prices, poorer shopping experience and reduced range of products.
The CMA also expressed concerns that prices could rise at a "large number" of Sainsbury's and Asda petrol stations.
"These are two of the biggest supermarkets in the UK, with millions of people purchasing their products and services every day. We have provisionally found that, should the two merge, shoppers could face higher prices, reduced quality and choice, and a poorer overall shopping experience across the UK," said Stuart McIntosh, chair of the independent inquiry group carrying out the investigation.
Furthermore, the CMA also expressed concern about online shopping, stating that the merger will affect the quality of the service.
Among the potential options for addressing these concerns, the CMA proposed blocking off the merger or requiring the two companies to sell off a "significant number of stores and assets" - potentially including one of the Sainsbury's or Asda brands - to "recreate the competitive rivalry lost through the merger".
"The CMA's current view is that it is likely to be difficult for the companies to address the concerns it has identified," the regulator concluded.
The findings are only provisional, and the companies are now welcomed to respond to them addressing the regulator's concerns.
Sainsbury's said on Tuesday that it "fundamentally disagree" with the findings reiterating that the merger will lead to significant cost savings allowing the two grocers to lower prices.
"We are surprised that the CMA would choose to reject the opportunity to put money directly into customers' pockets, particularly at this time of economic uncertainty," Sainsbury's said.
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