Curtain for Sainsbury’s – Asda merger

There will be no merger of Asda and Sainsbury’s, after the Competition and Markets Authority vetoed the move. The chains will not appeal, so the merger is definitively off the cards.

“Taking 1 billion pounds out of customers’ pockets”

Despite substantial consessions made by both chains – ranging from lower prices to a cap on margins ‑ the competition authority refuses to greenlight the merger, which was supposed to lead to the formation of Great Britain’s major supermarket group. Together, they would account for a third of all spendings on the British food market.

The competition watchdog maintains that the merger would instead lead to higher prices for consumers and would deteriorate the shopping experience for millions of customers. “It would reduce competition in supermarkets and online grocery shopping and at the companies’ petrol stations”, Stuart McIntosh, chair of CMA’s inquiry group, explained to the BBC. “We think that is likely to lead to higher prices or other changes which would be unwelcome to shoppers, such as longer checkout queues.” He also pounts out that the concessions that the chains agreed to were “based on cost savings which we don’t think are likely to be realised. Also those price promises are very likely to be difficult to track in practice.”

Sainsbury’s CEO Mike Coupe is a disappointed man, stating that the competition watchdog was “effectively taking one billion pounds out of customers’ pockets.” He continued to say that the CMA’s conclusion “ignores the dynamic and highly competitive nature of the UK grocery market.” However, he added that he will not appeal against the CMA’s decision, so the merger is effectively off the table.