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Kidswear in the spotlight in Sainsbury’s and Asda merger inquiry

The Competition and Markets Authority (CMA) has announced the proposed merger of Sainsbury’s and Asda will now undergo an in-depth investigation, which will consider competition for children’s clothing.

After it completed its initial Phase 1 investigation, the CMA announced the merger will undergo an in-depth Phase 2 study. It released a statement outlining several new areas up for scrutiny. Fuel, toys and some electricals will be investigated, in addition to groceries purchased in store and online, and kidswear, which includes school uniforms.

The level of competition provided by competitors such as growing budget chain Aldi, which also sells kidswear, and online players, including grocery and non-grocery retailers, will also be considered as part of the second phase.

The investigation aims to assess whether the purchase of Asda by Sainsbury’s will lead to higher prices, a poor shopping experience and lower quality of products for shoppers.

The CMA previously identified 463 areas in which the supermarkets may have to close stores to avoid a significant lessening of competition and gain approval for the merger. The more thorough investigation is likely to be welcomed by Sainsbury’s, particularly the broader range of competitors being considered beyond main rivals Tesco and Morrisons

Stuart McIntosh, chair of the independent inquiry group, said in a statement, “Today, we are setting out a number of areas that we expect to look at as part of our investigation. We welcome views on the effects of the merger and will carefully consider any evidence that we receive.”

Anyone is welcome to submit evidence that may help the enquiry in writing to the CMA by 30 October.

The CMA plans to announce its provisional findings early next year. The statutory deadline for its final decision is 5 March 2019.

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