Sainsbury’s/Asda mega merger is formally blocked by CMA
Sainsbury’s and Asda have called off their planned £13bn merger after it was formally blocked by the competition regulator on the grounds it would lead to higher prices.
The pair admitted defeat after the Competition and Markets Authority (CMA) completed its final report on the tie-up – first announced a year ago – saying it had not shifted from its view that shoppers and motorists using their petrol stations would be “worse off”.
A merger would have created the largest player in the UK grocery sector, claiming more market share than the current leader Tesco.
Sainsbury’s and Asda had argued that their combined buying power would have left customers better off.
They had also offered to sell 150 of their stores to help address the CMA’s concerns about weaker competition.
The regulator was also concerned suppliers would be squeezed.
Stuart McIntosh, who chaired the CMA inquiry, said no remedies were sufficient to satisfy its broad range of worries.
He said: “It’s our responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week.
“Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers.
“We have concluded that there is no effective way of addressing our concerns, other than to block the merger.”
The ruling prompted a bitter response from the chains.
Sainsbury’s boss Mike Coupe said: “The specific reason for wanting to merge was to lower prices for customers.
“The CMA’s conclusion that we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market.
“The CMA is today effectively taking £1bn out of customers’ pockets.”
Asda said it was “disappointed” by the decision while Judith McKenna, chief executive of its US parent firm Walmart, added: “Our focus now is continuing to position Asda as a strong UK retailer delivering for customers.
“Walmart will ensure Asda has the resources it needs to achieve that.”