CMA blocks Sainsbury’s/ Asda tie-up

CMA blocks Sainsbury’s/ Asda tie-up



The Competition and Markets Authority (CMA) has blocked the combination between Sainsbury’s and Asda, setting a low threshold for intervention.  This decision suggests that future mergers between the Big Four UK supermarkets chains will face significant competition hurdles at both local and national level.

The CMA’s final report largely confirmed its provisional findings, although the number of concerns in local markets was reduced.  Nevertheless, the CMA concluded on a balance on probabilities that the proposed merger between the UK’s second and third largest grocers would lead to a substantial lessening of competition on a local and national level.  The CMA concluded that the transaction would lead to increased prices, reductions  in the quality of products available and negative effects in online shopping where customers would likely face higher process and fewer delivery options.

In previous grocery retail mergers, the CMA has largely focused on the impact of competition in local markets.  Here the CMA has sustained a national theory of competitive harm which it found could not be remedied by divestiture of stores in those local markets where the parties overlap. 

Further, the CMA did not find that the promise of £1 billion price reductions was sufficient to offset the concerns it had identified and was too vague and difficult to verify. The efficiencies claimed needed to be much bigger and clearly substantiated to have changed the CMA’s conclusions.





https://www.gov.uk/government/news/cma-blocks-merger-between-sainsburys-and-asda