25th Apr 2019 07:25
LONDON (Alliance News) - J Sainsbury PLC has abandoned its planned merger with Asda Group Ltd, it said Thursday, following the UK regulator's decision to block the move.
The UK Competition & Markets Authority has blocked the move after deciding it would increase prices in stores, online, and at petrol stations.
There would be a "substantial" lessening of competition were the two to merge, the CMA said Thursday, confirming its previously stated preliminary opinion. It said UK shoppers would be affected everywhere, not just where Sainsbury's and Asda stores overlap.
Stuart McIntosh, who chaired the CMA's inquiry group, commented: "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 there is no effective way of addressing our concerns, other than to block the merger," he added.
In its own statement Thursday, FTSE 100 Sainsbury's said it has abandoned the deal, in agreement with Asda's owner Walmart Inc.
Sainsbury's Chief Executive Mike Coupe commented: "The specific reason for wanting to merge was to lower prices for customers. The CMA's conclusion we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market.
"The CMA is today effectively taking GBP1 billion out of customers' pockets."
"Sainsbury's is a great business and I am confident in our strategy. We are focused on offering our customers great quality, value and service and making shopping with us as convenient as possible," he concluded.
Judith McKenna, head of Walmart's International business, said the firm is "disappointed" with the CMA's decision, while Asda Chief Executive Roger Burnley said the decision to explore a merger with Sainsbury's had been the right one.
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