Store fears over £12bn retail merger

Sainsbury’s and Asda have been warned by the competition watchdog that nearly 500 of their supermarkets overlap following initial investigations into the £12 billion tie-up.

The Competition and Markets Authority (CMA) said findings of its so-called phase one inquiry into the deal found potential competition issues for stores in 463 local areas.

It raised concerns over 225 Sainsbury’s stores and 238 Asda stores.

The revelation raises the prospect of potential widespread store sell-offs in order to see the CMA give the deal the green light.

The CMA last week launched the second stage of its investigation into the merger, which will create a supermarket titan bigger than Tesco, with revenues of £51 billion and 2,800 stores.

In findings of its initial inquiry and decision to refer the deal to a Phase Two probe, the CMA said: “At a local level, the parties’ stores overlap in several hundred local areas across the UK.

“The CMA believes that the merger may give rise to a realistic prospect of an SLC (substantial lessening of competition) in many of these local areas if Sainsbury’s and Asda are insufficiently constrained by other local competitors.”

A spokesman for Sainsbury’s and Asda said: “We look forward to working with the CMA on the Phase 2 inquiry, where we expect it to conduct a full review of the market and take these changed market dynamics into consideration.”

Two of Britain’s biggest supermarkets are planning to merge.