SAINSBURY-ASDA £7.3B DEAL BLOCKED
Regulator says merger will lead to higher prices, less choice
WALMART Inc’s Asda and J Sainsbury Plc dropped their £7.3 billion (RM38.92 billion) bid to create the United Kingdom’s largest supermarket chain after antitrust authorities blocked the deal, saying it would lead to higher prices and less choice for shoppers.
The companies quickly raised the white flag after the Competition and Markets Authority (CMA) formally rejected the combination of the country’s secondand third-largest grocery chains. The regulator had rejected Sainsbury’s offer to roll out £1 billion in price cuts and sell as many as 150 stores.
“The CMA’s conclusion that we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market,” said Sainsbury chief executive officer Mike Coupe in a statement. “The CMA is effectively taking £1 billion out of customers’ pockets.”
The CMA decision is a significant blow to Coupe, who has staked his career on driving forward a deal he said would be “transformational”.
Sainsbury lacks the buying power of market leader Tesco Plc and is operating in a highly competitive industry that’s been overhauled by discounters Aldi and Lidl and online food operations.
In its final report yesterday, the regulator held off making major changes to its preliminary findings even after the grocers accused officials of making errors in their analysis and said they were duped about a rival’s intentions.
The CMA did tweak its analysis slightly to show the combination would hurt competition in 537 local areas, down from its prior calculation of 629 problematic neighbourhoods.