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Competition regulator blocks Sainsbury's/Asda merger

The UK’s competition watchdog has formally blocked the proposed merger of supermarkets Sainsbury’s and Asda.

In its final report published today, the Competition and Markets Authority (CMA) said that UK shoppers and motorists would be “worse off” if the two supermarkets were to merge. 

The CMA said the merger should not go ahead because of “expected price rises, reductions in the quality and range of products available, or a poorer overall shopping experience”.

As a result, Asda, its parent Walmart and Sainsbury’s have mutually agreed to terminate the transaction.

Stuart McIntosh, chair of the inquiry group, said: “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.”

Roger Burnley, CEO of Asda, commented: “We’re disappointed with their findings but will continue to find ways to put money back into customer’s pockets and deliver great quality and service in an ever-changing and demanding market.

“I have always been hugely aware that the last year has been an unsettling time for all of our colleagues and am immensely grateful for their commitment and dedication during that time. Our focus is now on the most important job we all have – delivering for our customers.”

Sainsbury’s CEO, Mike Coupe, said: “The specific reason for wanting to merge was to lower prices for customers. The CMA’s conclusion that we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market. The CMA is today effectively taking £1 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.”

 

 

Readers' comments (2)

  • If Mike Coupe genuinely believes that 'the specific reason for wanting to merge was to lower prices for customers', then he is more deluded than anyone ever thought. This is not why any business buys or merges with another, not anywhere. Not in the real world.

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  • darren hoggett

    Asda and Sainsbury's merger would have been unholy alliance that would not have benefited customers. They are best apart.

    Coupe's comments are at best, absolutely ridiculous. For the CEO to come out and say that is insulating everybody's intelligence.

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