AT LAST, BRITONS ARE PUT BEFORE BOSSES

THe abrupt end to the £ 12billion Sainsbury’s and Asda fandango should be applauded by every consumer and food producer in the land. extravagant claims made by the deal’s main proponents that a merger would deliver price reductions of £1billion for consumers have been forcefully rejected by competition regulators.

If it had been approved, Sainsbury’s-Asda would have created a retail behemoth bigger than current market leader Tesco and cut the number of big supermarkets from four to three. Inevitably, this would have lessened choice for consumers.

Sainsbury’s failed in its argument that the deal was vital for it to challenge German no-frills retailers Lidl and Aldi, online rival Ocado, newcomer Amazon and takeaway delivery firms Just eat and Deliveroo.

Chief executive Mike Coupe and Asda boss Roger Burnley underestimated the Competition and Markets Authority (CMA), whose new chairman, former Tory MP Andrew Tyrie, has taken a more consumer-friendly approach, putting community interests above those of business.

The CMA concluded that ‘shoppers and motorists would be worse off’ under the deal. It warned bluntly that millions of Sainsbury’s and Asda shoppers would have faced higher prices, lower quality and less choice.

Significantly, farmers are relieved that their concerns were heeded and the danger of ‘abusive’ market power has been avoided. Food producers were deeply worried that a giant Sainsbury’s-Asda would bully small suppliers, squeeze the price it paid for raw goods and delay payments.

The deal’s collapse is an embarrassment for Coupe, who was videoed humming crassly ‘We’re in the money’ when it was first announced.

Shares in Sainsbury’s have fallen 20 per cent this year and it has been losing market share to rivals, with Coupe accused of spending too much time on the proposed mega-deal.

Paradoxically, Asda – owned by the world’s largest retailer, Walmart – has managed seven successive quarters of increased sales and market share in the UK, defying predictions that established supermarkets will struggle against the rise of German discounters and online challengers.

City experts believe Sainsbury’s recently appointed chairman, Martin Scicluna, will have little choice but to replace Coupe, considering that the failed merger attempt has cost the company tens of millions of pounds in legal and advisory fees and has left staff fearing for their future.

Predictably, Sainsbury’s has condemned the CMA for concluding that prices would have risen if the merger had gone ahead. It claimed that the innate competitiveness of the grocery market guaranteed to keep prices at a minimum.

Its managers have privately expressed doubt about the quality of the analysis and the independence of the thinking of the CMA panel that reviewed the case.

ULTIMATeLY, the collapse of the deal has far- reaching implications for British business and consumers. In recent decades, competition authorities have tried to avoid interfering in the free market. Several deals, such as Tesco’s takeover of the wholesaler Booker and BT’s absorption of mobile rival ee, have been nodded through with little interference.

However, the arrival of Andrew Tyrie, a veteran of the Commons Treasury select committee, where he was the scourge of the big banks, has meant a more forensic approach.

In effect, this means that any future merger plans between the country’s biggest supermarkets are very unlikely to happen.

Also, the CMA has sent a powerful signal to companies that directly serve customers – a warning that they will face high hurdles if they want to proceed with deals benefitting shareholders at the expense of consumers and suppliers.

As such, the ruling against the Sainsbury’s deal is a landmark one representing a significant rebalancing for free-market capitalism.