Sainsbury’s and Asda merger investigation
COMPETITION watchdogs have been urged by Business Secretary Greg Clark to investigate the impact of a merger of Sainsbury’s and Asda on suppliers.
The Competition and Markets Authority yesterday began inviting comments ahead of an expected probe into the £14billion tie-up which would overtake Tesco as the UK’s biggest grocer.
The deal is set to achieve cost savings of £500million and shoppers have been promised price cuts of up to 10 per cent on groceries, but Sainsbury’s boss, Mike Coupe, has said no stores would close.
Clark has added his concerns for suppliers to those expressed by MPs from two departments, Environment, Food and Rural Affairs and Business, Energy and Industrial Strategy.
Clark asked CMA chief executive Andrea Coscelli to take account of the impact on suppliers as well as rival supermarket chains.
He said: “The effect of this potential increased market power has been highlighted as a potential concern with regard to existing suppliers.”
Interested parties have until June 4 to comment. Phase one would assess whether the deal could cut competition and choice for shoppers. The CMA said: “We have just begun initial consideration of a complex deal, with the opening of a formal investigation likely to be in the coming months. However, the impact that a merger could have on competition in the supply chain was considered as part of the Competition Commission’s 2003 investigation into the acquisition of Safeway, the last major UK investigation involving supermarket groups. While the sector has evolved since then, it is likely that we will consider this issue again as part of our review of this merger.”
Federation of Small Businesses chairman Mike Cherry has warned that “a merger of this size will concentrate a lot of power in the hands of one giant company, and it’s important that power isn’t misused to coerce small suppliers into accepting unfair contracts and poor payment terms”.
He added: “The CMA should be looking for cast-iron commitments that a positive standard will be set for working with smaller suppliers.”