Sainsbury’s and Asda revamped offer of commitments

Sainsbury’s and Asda have announced details of enhanced commitments in an attempt to secure approval from the Competition and Markets Authority for their merger.

The CMA published provisional findings in February when it found wide ranging and significant competition concerns.  The CMA said 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 expected that prices could rise at the 100 or so petrol stations owned by the merging parties.

The merging parties have now committed to reduce prices on “everyday items” by at least 10 per cent through £1 billion worth of investments.  They also promise to cap profits on petrol sales which would be independently reviewed by a third party.

The parties have said that cost savings would be made by putting Argos stores into Asda and through joint procurement.  At the same time, they pledge to pay all small suppliers within 14 days.

These behavioural commitments would also be supported with grocery and petrol forecourt divestments across both brands.

These commitments show that the merging parties are determined to seek to address the extensive competition concerns that the CMA has identified across 629 locations.   By announcing specific details of how the merger efficiencies would flow through to consumer benefits the parties are seeking to address the CMA’s concerns that consumers would lose out through increased prices and reduced quality and choice.  The CMA has a statutory deadline of 30 April to make a final decision.