'Sufficient concerns': Investigation deepens into Sainsbury's and Asda merger

The NFU has said it will be examining the merger "very carefully" (Photo: Stephen Chung/LNP/REX/Shutterstock)
The NFU has said it will be examining the merger "very carefully" (Photo: Stephen Chung/LNP/REX/Shutterstock)

The proposed merger between Sainsbury's and Asda raises "sufficient concerns" and will be referred to a more in-depth review by the Competition and Markets Authority.

The two retailers are planning to merge together to create the country's largest retailer.

The deal between Asda and Sainsbury's will create a grocery giant overtaking Tesco as number one in the sector, with combined revenues of £51bn.

The two retailers have even promised to slash prices on products by up to 10%, if their merger goes through.

But the Competition and Markets Authority (CMA) fears shoppers could actually face higher prices or a worse quality of service.

The NFU has previously written to the CMA expressing concern the merger could bring a financial impact on suppliers, along with issues of monopoly and competitiveness.

Indeed, a report reveals that suppliers will bear 70 percent of the brunt of the merger's "efficiencies", which includes products reducing in price by 10 percent.

'Sufficient concerns'

In August, the Competition and Markets Authority (CMA) opened its initial Phase 1 investigation into the merger and announced the companies had requested a ‘fast-track’ referral to Phase 2.

The CMA has now confirmed, through its Phase 1 investigation, that the deal raises sufficient concerns to be referred for a more in-depth review.

These concerns will be considered further in the Phase 2 investigation, along with other issues raised so far with the CMA – including those relating to fuel, general merchandise and increased ‘buyer power’ over suppliers.

The Phase 2 investigation is a more in-depth review, led by an inquiry group chosen from the CMA’s independent panel members.

The group will gather evidence – in particular through multiple customer surveys and engagement with other retailers, suppliers and industry bodies – to inform its detailed analysis.

An issues statement, setting out in detail the issues that the inquiry group expects to investigate, will be published in the coming weeks. Members of the public and other interested groups will be invited to give their views on this.