The proposed merger of Asda and Sainsbury’s could lead to a “substantial lessening of competition” in 463 local areas, according to the Competition and Markets Authority (CMA).
The CMA has released the results of its Phase 1 investigation into the merger, which led to its decision to trigger an in-depth Phase 2 probe.
“The CMA…believes that the Merger gives rise to a realistic prospect of an SLC in the retail supply of groceries in store at a national level,” said CMA senior director Sheldon Mills.
“At a local level, the parties’ stores overlap in several hundred local areas across the UK. The CMA believes that the Merger may give rise to a realistic prospect of an SLC in many of these local areas if Sainsbury’s and Asda are insufficiently constrained by other local competitors.”
The statutory deadline for Phase 2 investigation is 5 March 2019. The CMA appointed the inquiry group on 19 September 2018.
The group will be chaired by inquiry chair Stuart McIntosh. The role of the panel will be to gather evidence – through multiple customer surveys and engagement with other retailers, suppliers and industry bodies – to inform its detailed analysis.
A significant proportion of third parties have raised concerns regarding the effect of the merger, but only one third-party opposed the supermarkets’ request for a fast-track reference, the CMA said.
The GMB union, which represents Asda workers, said it would “not sit idly by” if 463 stores were offloaded as part of the merger with Sainsbury’s.
GMB national officer Gary Carter said: “The disposal of 463 Asda/Sainsbury’s stores would put thousands of jobs at risk and have a devastating economic impact on their local communities. GMB cannot see where you will get that number of buyers in an already depressed retail market.
“This number of store disposals would make the proposed merger unviable.”
Sainsbury’s and Asda announced their intention to merge at the end of April. The merger would see more than 2,800 Sainsbury’s, Asda and Argos stores - and several of the UK’s most-visited retail websites - trade under one combined business. Sainsbury’s has claimed the merger would lead to price reductions of up to 10%.