It’s baloney! Bosses attacked for promise to cut prices in £14bn supermarket merger
BOSSES at ASDA and Sainsbury’s have been accused of planning to ‘cut the throats’ of small suppliers with a £14bn merger that will create a new mega-supermarket.
Store bosses claim the key benefit of the deal will allow them to cut prices on some essential products by 10pc, while protecting small suppliers, such as British farmers.
However, MPs say this is not true and that suppliers, including many small businesses, will have to carry the burden. In a blistering attack, they accused senior executives of ‘talking baloney’ and ‘not being truthful’.
MPs say suppliers are terrified of the merger, which will give the new group 30pc of supermarket sales, with Tesco having almost another 30pc.
The attack came as the chief executive of Asda, Roger Burnley, 52, and Sainsbury’s boss Mike Coupe, 57, gave evidence on the planned merger to MPs on the Environment Food and Rural Affairs Committee.
Asked about the promise of price cuts, Burnley said: ‘We have been very clear that we are committed to reducing the price of everyday items ... by around 10 pc.’
Justifying the merger, he said: ‘This is about making us a more successful business ... as our customers increasingly demand value and low prices from us.’
Burnley said the evidence of store closures, such as Toys R Us and Maplin, pointed to a radical change in shopping habits. On concerns that small suppliers will be squeezed, he said: ‘I refute that the supplier will be paying the price ... We need the supply base as much as they need us the retailer.’
Questioning Burnley, the Tory MP and committee chairman Neil Parish described the promises of 10pc price cuts without harming small British suppliers as ‘total baloney’.
He said: ‘You are going to save 10pc, therefore you are going to save it at the expense of those who supply you ... For goodness sake, be honest with us, don’t come in here and give us a load of baloney. You have got to face the fact that if you are going to save 10pc you are going to get most of that from the supply chain.’
He accused Burnley of wrapping up the merger plans with politically correct promises about protecting suppliers, which will not stand the test of time. Parish said: ‘You tell us it is a cut- throat business ... I know exactly whose throats you are going to cut. The more you give evidence the more unbelievable it becomes.’
Meanwhile, the Sainsbury’s chief executive told MPs the merger would help the company compete with Amazon in the future, which is 100 times bigger with enormous resources.
Coupe said it would also be able to compete more effectively with Aldi and Lidl, which are also much bigger than Sainsbury’s in terms of global stores and sales. ‘We want to secure our business’s future,’ he said.
Coupe said the main burden of funding price cuts for shoppers would be carried by around 150 big, mostly foreign, suppliers.
He said American-owned Weetabix, for example, which currently makes 20p in the pound profit on sales of the cereal, would be asked to cut prices.