New probe into £12bn supermarket merger

Britain’s competition watchdog has launched the second stage of its investigation into the proposed £12 billion merger between supermarkets Sainsbury’s and Asda.

The deal will now be subject to a so-called Phase Two in-depth probe to assess how it could affect competition for UK shoppers, the Competition and Markets Authority (CMA) confirmed.

The CMA’s investigation will consider whether the tie-up could lead to less choice, higher prices or poorer quality services.

It said its initial investigations had confirmed that the deal raised sufficient concerns for it to be referred for a more in-depth review.

The CMA continued: “The companies are two of the largest grocery retailers in the UK.

“Their stores overlap in hundreds of local areas, where shoppers could face higher prices or a worse quality of service.”

The CMA said its probe would also look at issues relating to fuel, general merchandise such as clothing, and whether the merged company could use its increased buying power to squeeze suppliers. It will send out an statement detailing the issues for review in the coming weeks.

The authority’s panel of investigators will gather evidence through customer surveys and discussions with other retailers, suppliers and industry bodies to inform its detailed analysis.

Sainsbury’s and Asda have gone on record saying that suppliers will bear the brunt of a pledge to bring down the price of everyday products following their union.

It is also expected that scores of stores will have to be offloaded as part of the competition review.

The merger is being investigated by the Competition and Markets Authority.