Watchdog shows its teeth

REGULATORS have finally shown they will stick up for customers with a landmark intervention in the proposed merger of Sainsbury’s and Asda, experts say.

the £14bn supermarket deal looks set to be scuppered by the demands from the Competition and Markets Authority.

It is the CMA’s first major test under the leadership of Lord Andrew tyrie, a former tory MP who made his name as a scourge of the banks while running the treasury Select Committee.

Scott Corfe, chief economist at the Social Market Foundation, said: ‘Our research has shown that reducing competition leads to worse outcomes for consumers, whether that be in the form of higher prices, reduced customer service or more limited choice.

‘We welcome the CMA taking a tough line on the proposed merger. Rather than allowing supermarkets to merge themselves out of trouble, by bullying suppliers such as farmers to lower prices, we should be forcing these firms to try harder.’

Industry insiders expected the CMA to allow the merger, with conditions.

But they were taken aback by how tough the watchdog’s demands were.

Nelson Jung, a competition partner at lawyer Clifford Chance, said: ‘this is a step change in the way the CMA analyses retail mergers that could have far-reaching implications for other retail mergers in the UK.’

Citibank’s Nick Coulter, said in a note that the decision was unprecedented.

And Jonathan Compton, a partner at lawyer DMH Stallard, said: ‘the CMA findings were uncharacteristically strong.’