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UK Supermarkets, Suppliers Voice Concern Over Sainsbury's/Asda deal

By Donna Ahern
UK Supermarkets, Suppliers Voice Concern Over Sainsbury's/Asda deal

Sainsbury's bid to buy Asda could endanger competition at the national and local level and risks tacit coordination between the two, according to submissions from rivals and suppliers to the regulator investigating the deal.

Last month, the Competition and Markets Authority (CMA) launched a preliminary "invitation to comment" on Sainsbury's £7.3 billion ($9.7 billion) agreed cash and shares deal to buy Walmart's Asda that would see the combined group overtake Tesco as Britain's biggest supermarket group.

The deal is being closely watched by rivals and competition lawyers to see if the regulator will take into account the role of discounters Aldi and Lidl and online competition when assessing the sector.

On Monday, the CMA published a summary of the representations it had received from a wide variety of parties, including other supermarket groups, wholesalers, suppliers, local government representatives and members of the public.

It said it would take these views into account as its investigation develops.


National Impact

The CMA said a number of submissions raised concerns about the impact of the deal at the national level - that it would lead to increased concentration in the market with fewer national players and could give rise to higher prices, reduced choice and less innovation.

Other concerns were raised about competition at the local level, in some cases within specific areas where a Sainsbury's store and an Asda store are close to each other.

The CMA said the risk of tacit coordination between the two brands - which Sainsbury's has said would be kept separate - was also brought up, with the potential for higher profits if Sainsbury's and Asda coordinate to limit their rivalry.

Other submissions raised concerns about the impact of the deal on suppliers and the potential knock-on effect on consumers.


The CMA's probe is still in its information gathering "pre-notification" phase before a formal investigation is launched by the regulator.

Phase 2

A further "invitation to comment" will be opened at this stage.

The CMA anticipates that pre-notification will complete "in the coming months."

Sainsbury's' and Asda want the regulator to fast track to a "phase 2" examination so the deal could be completed in the second half of 2019.


The CMA's remit is to ascertain whether merger situations could result in a substantial lessening of competition. It is independent of government when making decisions on mergers.

Last year's surprise decision by the CMA to unconditionally clear Tesco's £4 billion purchase of wholesaler Booker has encouraged Sainsbury's and Asda to believe they can get the transaction through.

News by Reuters, edited by Donna Ahern. Click subscribe to sign up for the Checkout print edition.

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