LONDON and LEEDS, U.K. - After Walmart announced the sale of its Asda banner and stores to Sainsbury’s in April of last year, the U.K.’s Competition and Markets Authority (CMA) has issued the findings of its Phase 2 investigation—noting that the deal could “could lead to a worse experience for in-store and online shoppers across the UK” and outlining ways in which the U.K. authority could potentially scuttle or enervate the deal on anti-trust grounds.
The deal, originally valued at roughly $10.1 billion, is now being reported as “a proposed…$17 billion…mega-merger.”
“These are [two] of the biggest supermarkets in the U.K., with millions of people purchasing their products and services every day,” noted Stuart McIntosh, Chair of the CMA’s independent inquiry group, in a press release. “We have provisionally found that, should the two merge, shoppers could face higher prices, reduced quality and choice, and a poorer overall shopping experience across the U.K. We also have concerns that prices could rise at a large number of their petrol stations.”
Sainsbury’s and Asda released a joint statement disputing the CMA’s findings.
“These findings fundamentally misunderstand how people shop in the U.K. today and the intensity of competition in the grocery market. The CMA has moved the goalposts, and its analysis is inconsistent with comparable cases,” said an unnamed spokesperson, in the joint statement. “Combining Sainsbury’s and Asda would create significant cost savings, which would allow us to lower prices. Despite the savings being independently reviewed by two separate industry specialists, the CMA has chosen to discount them as benefits. We are surprised that the CMA would choose to reject the opportunity to put money directly into customers’ pockets, particularly at this time of economic uncertainty. We will be working to understand the rationale behind these findings and will continue to press our case in the coming weeks.”
View this post on Instagram
The CMA noted that it has set out a number of options for addressing its anticompetitive concerns, noting: “[t]hese 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.”
Details of the CMA’s investigation can be found on the Authority’s website.
For more as the situation develops, keep reading AndNowUKnow.
