The Competition and Markets Authority sees too much overlap between Sainsbury's and Asda in as much as 463 locations after the planned merger of the two chains, leaving consumers with too little choice. The decision is a threat to just shy of 500 stores.
Over one in three stores endangered
The CMA publicised these conclusions after the first round of its investigation into the planned merger of Sainsbury's and Asda. The two already make up more than 30 % of all groceries sold at the nine biggest supermarket chains in the United Kingdom, a share as big as that of the market industry leader Tesco.
If the merger is greenlit, Sainsbury's and Asda will have to close a lot of stores: possibly up to 40 % of all the 1,210 stores owned by the prospective merger company. Analysts doubt that the CMA will actually demand the termination of those 460 supermarkets, but times are still tense for the employees of the two chains.
Don't forget Aldi and Lidl
There will be a second phase in the investigation, but both companies will be happy to co-operate with that one. According to a spokesman of Sainsbury's and Asda in the Guardian, the Office didn't take the changes in competition in the UK enough into account during their initial investigation. Failing to consider Aldi and Lidl as direct competitors, the first phase ignored their presence on the market.
Online competition and the rise of meal delivery services also warrant a mention, according to the two chains who are currently numbers two and three on the British market. Nevertheless, so far the investigation has only been looking at the companies' medium-sized and large supermarkets. In the second phase, the smaller supermarkets will be taken into account as well.