CMA blocks Sainsbury's-Asda merger
The anticipated merger between supermarket giants, Sainsbury's and Asda, has been blocked by the Competition and Markets Authority (CMA) over concerns that it would raise prices for consumers. The watchdg organisation claimed that it would also raise petrol prices and cause longer queues at checkouts.
Sainsbury's CEO, Mike Coupe said the atchdog was "effectively taking £1 billion out of consumers' pockets", but does not plan to appeal the decision.
"The CMA's conclusion that we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market", claimed Coupe.
The proposed deal would have formed the UK's largest supermarket chain. It would have accounted for a third of all supermarket spending across the UK.
Sainsbury's and Asda held that the merger would have significantly cut costs, allowing them to lower pricesfor customers across the UK. Some analysts claimed it was created to help combat the increase of discount stores such as Aldi and Lidl.
The CMA, which had already voiced concerns about the deal, retained that the arrangement would lower compitition. Sainsbury's has over 1,400 stores in the UK, 800 of which are local convinience shops. Asda has just over 600. The CMA argues that the merger would not only affect national competition but also local competition.
The chair of the CMA said "it would reduce competition in supermarkets and online grocery shopping and at the companies' petrol stations.
"We think that it is likely to lead to higher prices or other changes which would be unwelcome to shoppers, such as checkout queues."