The NFU has welcomed the recognition from the Competition and Markets Authority (CMA) to explore the impacts that the proposed merger between Sainsburys and Asda may have on the supply chain.
The NFU said its submission demonstrated that the proposed new entity may further consolidate the grocery supply chain in order to find cost and efficiency gains as a means to deliver the price savings for consumers.
The NFU raised the following areas of concern:
- The potential further consolidation of the grocery supply chain may impact availability and choice of product to consumers;
- The risk of abusive market power by the proposed new entity which could make unreasonable demands on suppliers and transfer excessive risks and unexpected costs on to primary producers. This in turn damages their ability to innovate and invest; and
- The effect on competition will outweigh any consumer benefit derived through lower prices.
In a statement, the NFU said: “Our evidence also highlights the risk of abusive market behaviours as a result of an increase in buying power by the new entity. In our members’ view, increased buying power could easily result in unreasonable demands on suppliers, in turn transferring excessive risk and unexpected costs onto primary producers.
“Coupled with the squeeze of margins, this could contribute to businesses ability to innovate and invest. The NFU wishes to see a fair, innovative and sustainable retail environment that allows all areas of the supply chain to deliver for consumers and businesses alike.”