The future of the Sainsbury’s-Asda merger is in doubt, after the Competition and Markets Authority (CMA) warned the deal could lead to a worse experience for in-store and online shoppers.
The CMA has published an explosive report on the findings so far into its investigation into the proposed link up, which was announced last year.
It found that the proposed deal lead to higher prices for shoppers, a poorer shopping experience, and reductions in the range and quality of products offered. It also has concerns that prices could rise at a large number of Sainsbury’s and Asda petrol stations.
The CMA said it has provisional concerns that the merger could lead to a substantial lessening of competition at both a national and local level. “The combined impact means that people could lose out right across the UK and that the deal could also cost shoppers through reduced competition in particular areas where Sainsbury’s and Asda stores overlap,” it said.
The CMA has, however, set out potential options for addressing its concerns. These include blocking the deal or requiring the merging companies to sell off a significant number of stores and other assets, potentially including one of the Sainsbury’s or Asda brands, to recreate the competitive rivalry lost through the merger.
The CMA’s current view is that it is likely to be difficult for the companies to address the concerns it has identified.
Sainsbury’s has reacted angrily to the CMA’s findings. Chief executive Mike Coupe described the analysis as ‘fundamentally flawed’ and said the retailer would be making ‘very strong representations’ to it about its ‘inaccuracy and lack of objectivity’.
“They have fundamentally moved the goalposts, changed the shape of the ball and chosen a different playing field. This is totally outrageous,” he told the BBC.
Sainsbury’s shares were down more than 12% in early Wednesday trading.