The proposed merger between Sainsbury’s and Asda has been blocked by the Competition and Markets Authority (CMA).
In its final report, published today, the CMA concluded that UK shoppers and motorists would be worse off if the two retailers merged to create a single business accounting for around one-third of the UK grocery market.
Following an in-depth investigation, a group of independent CMA panel members concluded that the move was likely to push consumer prices up, reduce the quality and range of products available and result in a poorer overall shopping experience.
The deal would result in a ‘substantial lessening of competition at both a national and local level for people shopping in supermarkets’. This would mean shoppers right across the UK would be affected, not just in the areas where Sainsbury’s and Asda stores overlap, the group concluded.
Stuart McIntosh, chair of the inquiry group, said: “We have concluded that there is no effective way of addressing our concerns, other than to block the merger.”
Sainsbury’s and Asda had said the planned merger would have cut their costs, allowing them to lower prices for consumers across the UK. Sainsbury’s chief executive Mike Coupe said the regulator was ‘effectively taking £1bn out of customers’ pockets’. But he said the supermarkets would not appeal against the decision.
‘Real concern’
The NPA had expressed ‘real concern’ over the potential implications of the deal for pig producers when the plans were announced a year ago. Sainsbury’s had said consumer prices would be cut by 10%.
“The cuts will have to fall somewhere and our concern is that primary producers – including pig farmers, who have frequently already operated on unfeasibly tight margins over the past 10 years – will bear the brunt,” NPA chairman Richard Lister said at the time.
NFU Director General Terry Jones said: “The NFU’s key concern about the proposed merger has always been the potential impact it could have on our members, with the possibility for abusive market power, as well as the impact on consumer choice and the quality of products coming to the market.
“It is clear from the CMA’s findings that they recognise the impact further consolidation could have on the supply chain, and ultimately shoppers.”