CMA probes impact of Sainsbury-Asda tie-up on grocery prices, suppliers

The Competition and Markets Authority has outlined which areas it will probe as part of an investigation into J Sainsbury’s £15bn merger with rival supermarket chain Asda.

The CMA referred the proposed deal for investigation last month, and today said groceries (both in-store and online), fuel and general merchandise – with a focus on toys, small electricals and children’s clothing, including school uniforms – would be of specific interest.

Stuart McIntosh, chair of the group that is carrying out the probe, said: “Millions of people shop at Asda and Sainsbury’s every week, so it is essential we carry out a thorough investigation into their proposed merger.

Our job is to find out whether the merger will result in people paying more or being faced with less choice or a poorer-quality shopping experience.

“We welcome views on the effects of the merger and will carefully consider any evidence that we receive.”

The CMA will also look at the level of competition from newer or growing retailers, such as the discounters Aldi and Lidl; whether savings might be passed onto shoppers; and if the merged company could use its increased buying power to squeeze suppliers.

Sainsbury’s, the UK’s second largest supermarket chain, and Asda, the third-largest, announced merger plans in April. If the deal goes through, it would create the country’s biggest retail chain with a market share of around 31% and 2,800 stores, and would take around £1 of every £3 spent on groceries.

Shares in Sainsbury’s were off nearly 2% at 300p by 1pm in London. Asda is owned by US retail behemoth Walmart.

The CMA is expected to publish its provisional findings early next year ahead of the statutory deadline for publishing its decision on 5 March 2019.