MPs to grill Asda and Sainsbury's CEOs over proposed merger

Neil Parish, Chair of EFRA said the "shake-up" of the grocery market could affect farmers and suppliers (Photo: Stephen Chung/LNP/REX/Shutterstock)
Neil Parish, Chair of EFRA said the "shake-up" of the grocery market could affect farmers and suppliers (Photo: Stephen Chung/LNP/REX/Shutterstock)

An influential parliamentary committee has announced it will hold an evidence session into the proposed Asda and Sainsbury's merger due to concerns it could affect farmers and suppliers.

The Environment, Food and Rural Affairs Committee (EFRA) has today announced it will hold a one-off evidence session focused on the merger.

CEO's of Asda and Sainsbury's, Roger Burnley and Mike Coupe are to answer questions on merger and its impact on 20 June 2018.

The session will focus on the reasons behind the merger and its potential impact on farmers and suppliers.

The Committee will also hear from Chris Brown, Sustainable Business Director at Asda and Judith Batchelar, Director of Sainsbury’s Brand.

Neil Parish MP, Chair of the Environment, Food and Rural Affairs Committee, said: “Grocery retailers do not have a great record of treating their suppliers well, and some of them are cautious about the proposed Sainsbury’s and Asda merger.

“My Committee is holding this session to investigate how the biggest potential shake-up of the grocery market in recent years could affect British farmers and suppliers, as well as consumers.”

Rachel Reeves, Chair of the Business, Energy and Industrial Strategy (BEIS) Committee said the merger threatens consumer choice.

She said it “hands yet more power to mighty supermarket players and heaps more pressure on small and medium suppliers”.

“The CMA needs to be a champion of consumers and it must look closely at the impact of this merger on the supply chain as well as the effect on competition in the supermarket sector,” Ms Reeves explained.

Grocery giant

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 promised to slash prices on products by up to 10%, if their merger goes through.

The farming industry has viewed news of price cuts as a huge worry, with many in the industry already battling through poor financial returns.

The news has led a Green MEP to call on the European Union to block the merger, saying it would work against the interest of food producers.

MEP Molly Scott Cato said the UK’s food retail market is on a "conveyor belt towards increased concentration and reduced competition".

The Tenant Farmers Association (TFA) has also called for the government to rethink its refusal to extend the remit of the Groceries Code Adjudicator.

The organisation said there is a growing recognition that the food supply chain in the UK is "dysfunctional", and it is farmers who bear the brunt of the problems that this produces.

Another concern among farmers are the two retailers' differing sourcing policies. Latest shelf watch figures have highlighted the "vast difference" in Sainsbury's and Asda's approach to sourcing British pork.