Sainsbury faces major probe into £14bn merger with Asda

A FULL-BLOWN probe into the £14bn tieup of Sainsbury’s and Asda has been launched after fears were raised over stores that overlap in hundreds of local areas.

The Competition and Markets Authority (CMA) said the deal raised ‘sufficient concerns’ to warrant investigating the impact on prices, choice and customer service.

Sainsbury’s and Asda, the UK’s second and third largest supermarkets, are proposing to join forces in a deal that has pledged to lower prices while putting the squeeze on larger suppliers.

The watchdog said: ‘The deal raises sufficient concerns to be referred for a more indepth review. The companies’ stores overlap in hundreds of local areas, where shoppers could face higher prices or a worse quality of service.’ Some responses to the CMA’s initial inquiry into the merger warned the deal would reduce the quality of products, lower supply chain standards and in some cases force suppliers to go bust. The CMA said it would also look into concerns relating to ‘buyer power’ over suppliers.

Mike Cherry, chairman of the Federation of Small Businesses, welcomed the move.

‘It is vital that the executives at the very top can explain how the merger can take place without giving the merged chain increased buyer power over suppliers which would negatively impact the smaller firms in their supply chains,’ he said. ‘We would hope that this will be able to produce castiron guarantees that there will be a positive relationship with small suppliers.’