UK watchdog launches investigation into Sainsbury's-Asda deal

An investigation has been launched by the UK’s competition watchdog into the Sainsbury’s-Asda merger.

The Competition and Markets Authority (CMA) will look into whether the deal will mean less consumer choice, higher prices or worse service.

The combined group would be the UK’s biggest retail chain with 2,800 stores and 31.4 per cent of the grocery market.

Analysts have estimated that the CMA will recommend that six per cent, or 73, of the combined group’s supermarkets should be sold off.

The chief executive of the CMA, Andrea Coscelli, said: “About £190bn is spent each year on food and groceries in the UK so it’s vital to find out if the millions of people who shop in supermarkets could lose out as a result of this deal.

“We will carry out a thorough investigation to find out if this merger could lead to higher prices or a worse quality of service for shoppers and will not allow it to go ahead unless any concerns we find are fully dealt with.”

Sainsbury’s and Asda - which has been owned by US retail giant Walmart since 1999 - are the second and third largest supermarkets in the UK.

Under the terms of the deal, Walmart would be able to retain 42 per cent of the combined business.

In the past few months, the CMA has been gathering the information needed to start what is known as Phase 1 of the inquiry, where it will aim to work out whether the deal can be cleared relatively quickly, or whether a Phase 2 investigation is necessary.

Both Sainsbury’s and Asda have asked the CMA to fast-track Phase 1 so it can move rapidly on to the in-depth Phase 2 inquiry.

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