Store merger plans spark competition fear

Competition fears over merger plans

ANY POTENTIAL merger between Sainsbury’s and Yorkshirebased supermarket Asda must be investigated by the competition watchdog, Liberal Democrat leader Sir Vince Cable has said, as union leaders demanded urgent talks with company chiefs over jobs and security.

News of a potential merger, creating a supermarket giant as part of a £10bn deal, emerged at the weekend and could be formally announced this morning.

But York-born Sir Vince, a former Business Secretary, has said the Competition and Markets Authority (CMA) “must investigate” any deal after it emerged the two companies were in advanced talks. Shadow Business Secretary Rebecca Long-Bailey echoed Sir Vince’s calls, saying the merger would “squeeze what little competition there is in the groceries market even further”.

She warned that, in the absence of proper vetting, it would be “British shoppers that suffer from rising prices and British workers that may be fearing for their jobs”.

Unions have also raised fears over the impact on jobs, with leaders last night demanding urgent meetings with the chiefs of Asda supermarkets, which has its headquarters in Leeds, and Sainsbury’s, based in London, to seek assurances over the fu- ture of employees. Warning the CMA’s new chief Andrew Tyrie to “get tough with monopolies”, Sir Vince has said the watchdog should force the companies to sell off stores if the merger meant it would become too dominant in any one particular area.

A POTENTIAL merger between Asda and Sainsbury’s could create the country’s biggest supermarket, with the two retail giants overtaking Tesco in the hugely competitive grocery industry.

Sainsbury’s has confirmed it is in advanced talks over a “possible combination” with Leeds-based Asda, with an announcement expected this morning.

While it is not yet clear how the deal would be structured, suggested options include Sainsbury’s absorbing Asda stores, while the owners of the Leeds retailer, Walmart, take a large stake in the combined group.

In a statement, Sainsbury’s said: “J Sainsbury plc (Sainsbury’s) notes the speculation concerning a possible combination with Asda Group Limited.

“Sainsbury’s confirms that it and Walmart Inc are in advanced discussions regarding a combination of the Sainsbury’s and Asda businesses.” A further announcement was due to have been made at 7am today.

The latest official statistics for the retail sector show that Tesco has a 25 per cent grocery market share, while Sainsbury’s has 13.8 per cent and Asda has 12.9 per cent.

Together, if the merger went ahead, they would move ahead of Britain’s largest retailer Tesco, with 26.7 per cent of the grocery market.

The merger would have to be approved by the Competition and Markets Authority (CMA), because the two entities are the second and third-largest grocery retailers in the UK.

Some experts have admitted that they expect that a deal could be approved after the CMA’s decision to allow Tesco to take over Booker, the UK’s largest grocery wholesaler in a deal worth £3.7bn.

The move has sparked concern among workers’ unions, with leaders demanding urgent talks with management at both Asda and Sainsbury’s.

The GMB’s general secretary Tim Roache said: “Our first priority is to safeguard the job of every single Asda member, both in stores and in distribution.

“We are demanding an urgent meeting with Asda to get the answers and assurances our members need and deserve.

“GMB will be making sure the voices of supermarket workers are not lost amidst all the talk of mergers and acquisitions.

“We should never forget these companies’ empires are built upon the hard work of their employees.

“Rest assured, we will be exploring every available legal avenue to protect our members’ jobs.”

In January, Asda confirmed the latest round of redundancies at the group’s West Yorkshire headquarters, with nearly 30 jobs lost. The announcement followed the culling of nearly 300 jobs from Asda’s head office in September last year as the firm sought to cut costs.

National officer for the union Usdaw Joanne McGuinness said its priorities would be to protect any members, as well as to ensure any deal between the two retailers “does not impact on their jobs or incomes”.

The traditional high street has come under increasing pressure in recent years, with the growth in online retailers.

A report published earlier this month by Kantar Worldpanel, based on industry data, showed that Tesco and Morrisons continued to outperform their rival ‘big four’ supermarkets over the last quarter.

Sainsbury’s and Asda have also been squeezed by the no-frills discount chains Aldi and Lidl, who between them have a 10.5 per cent grocery market share in the UK.

Budget retailer Aldi was also recently named the best supermarket by shoppers – knocking Waitrose off the top spot for the first time in three years.

Such a merger as the one under consideration would not be the first time Sainsbury’s has acquired another high-street giant.

In April 2016, it announced a £1.4bn takeover of Argos, which led to better-than-expected results the following Christmas.

We are demanding an urgent meeting with Asda. GMB general secretary Tim Roache, who fears the impact on retail staff.