CMA off its trolley if Sainsbury/ Asda carve- up waved through

Ithink Sainsbury’s proposed takeover of Asda may be a bridge too far for the regulators. The early mood music is all wrong. Politicians and consumer groups are worried about it, for reasons ranging from pricing to a squeeze on suppliers, staff pensions and a lack of choice. The sheer size of the proposed supermarket combination is worrying. Current market leader Tesco and the new entity, let’s call it Buryasda, would have 60 per cent of the UK’S food retailing market. Morrisons would be a distant third. Sometimes things aren’t desperately nuanced, what you get is what you see on the tin. And this proposed marriage would change the supermarket landscape by its sheer magnitude.

Mike Coupe at Sainsbury’s has shown chutzpah in trying advance the idea at all. Fine, well done, he should still be told it doesn’t cut it on competition grounds. Sainsbury’s and Asda will argue that the Competition and Markets Authority ( CMA) has already paved the way for such consolidation by agreeing to Tesco’s recent acquisition of Booker and Sainsbury’s purchase of Argos. That doesn’t wash.

It is not comparing apples with apples. Booker and Argos were diversfication swoops to help ward off the depredations of the discounters Lidl and Aldi, Booker mainly a wholesale food producer with some convenience stores attached, and Argos a household goods retailer.

They were to aid reconfigurations of the purchasers’ business models. They were not like this present mooted deal is, taking a direct rival, and a big one at that, out of the game.

Look at how the regulators have never countenanced any of the big four banks – RBS- owned Natwest, HSBC, Barclays and Lloyds – merging because of the market dominance issues.

That was why RBS and Bank of Scotland were the only ones allowed to slog it out for Natwest in the first place, the Big Four model would not be compromised by the outcome. Likewise, the only reason Lloyds was allowed, even encouraged, by Gordon Brown to rescue an HB OS trying to make it a Big Five was that the latter was otherwise going to go banking belly- up with all sorts of spectral repercussions in a dooms daylike financial crash.

I think regulators have a visceral dislike of oligopolistic Big Threes in any sector. I hope so.