Watchdog seeking views on mega-merger
Competition officials have moved a step closer to embarking on a full inquiry into Sainsbury’s £12 billion tie-up with Walmart-owned Asda.
The Competition and Markets Authority (CMA) confirmed yesterday that it is looking into the deal and is currently in the “pre-notification” phase, which entails gathering information from the two supermarket majors before a formal inquiry can begin.
The CMA has also issued a preliminary “invitation to comment”, which calls on other interested parties to submit any initial views on the impact that the merger might have on competition.
The watchdog said it will be considering whether the proposed tie-up will result in “a substantial lessening of competition”.
A deadline of 5pm on Monday, 4 June has been set by the CMA for those views.
Experts have said that they expect the CMA to order the two parties involved in the deal to dispose of scores of stores as part of its review.
The combination of Sainsbury’s and Asda – the second and third biggest players in the UK, respectively – would spark one of the biggest shake-ups in the supermarket sector since Morrisons swooped for Safeway 14 years ago.
The tie-up would lead to the creation of a supermarket giant bigger than Tesco in terms of market share with revenues of about £51bn and a network of some 2,800 Sainsbury’s, Asda and Argos stores.
Sainsbury’s chief executive Mike Coupe believes the merger will produce £500 million in cost savings and allow it to further invest in lowering prices.