CMA provisionally finds extensive competition concerns in Sainsbury’s/ Asda merger

CMA provisionally finds extensive competition concerns in Sainsbury’s/ Asda merger

The Competition and Markets Authority has provisionally found wide ranging and significant competition concerns arising from the proposed merger between Sainsbury’s and Asda.  The CMA finds that the merger could lead to a worse experience for shoppers through increased prices and a reduction in the quality and range of products offered and across in-store and online services.  It also expects that prices could rise at the 100 or so petrol stations owned by the merging parties.

The CMA has set out potential solutions ranging from blocking the merger outright or divestments of a large number of the parties’ overlapping stores.  Remedies could extend to selling off one of the companies’ brands so as to create an independent competitor in the market.

It is not unheard of for the CMA to reverse its provisional findings, but that will be challenging against the concerns that it has identified.  Even if there are potential remedies that would be acceptable to the CMA, it remains to be seen whether these would be viable for the merging parties without scuppering the commercial rationale of the deal.

The CMA has invited comment on its provisional findings by 13 March and is due to release its final report by 30 April 2019.

Source: CMA press release, 20 February 2019:  https://www.gov.uk/government/news/sainsburys-asda-merger-could-push-up-prices-and-reduce-quality