CMA 'likely' to review Sainsbury's Asda merger

Sainsbury's proposed merger with Asda is "likely" to be referred to a review, the UK competition watchdog said on Monday.

Sainsbury and Walmart owner Asda confirmed on Monday morning that a merger deal had been agreed, with Walmart holding a 42% equity stake in the enlarged UK group. Each of the two supermarket chains account for not far off 16% of the market, behind leader Tesco's 28% market share and ahead of fourth-placed Morrisons with around 10%.

The Competition and Markets Authority said it "is likely to be subject to review" and it would engage in discussions with the two companies "to ensure they are supplying the information it will require before a formal investigation can begin" over the coming weeks.

Once the CMA’s formal investigation begins, an initial 'phase one' review that would be expected to run for up to 40 working days.

The first-phase review will see the deal assessed for the potential to reduce competition and choice for shoppers.

Due to the size of the deal, analysts said the deal is likely to be referred for an in-depth, Phase 2 investigation.

The CMA said this deeper dive would last up to 24 weeks, unless the two companies offered immediate proposals to address any competition concerns identified, while companies can also request to ‘fast track’ the referral of merger cases to Phase 2.