Sainsbury's-Asda merger blocked after food price concerns

Shoppers would face higher prices and reduced quality and choice, the CMA concluded
Shoppers would face higher prices and reduced quality and choice, the CMA concluded

The proposed Sainsbury's and Asda merger has been blocked by the Competition and Markets Authority after finding consumers would be worse off if it went ahead.

The CMA has blocked the £12bn merger after concluding that it would lead to increased prices and a reduction in quality of products available.

In its final report, published on Thursday 25 April, the body found that Sainsbury’s and Asda – two of the country’s largest supermarkets – would also provide an overall poorer shopping experience.

The deal would result in a 'substantial lessening of competition' at both a national and local level for people shopping in supermarkets.

This would mean shoppers across the UK would be affected, not just in the areas where Sainsbury’s and Asda stores overlap.

Stuart McIntosh, chair of the inquiry group, said it is the CMA's responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week.

“Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers,” he said.

“We have concluded that there is no effective way of addressing our concerns, other than to block the merger.”

The group also reviewed the companies’ statement that they would cut some prices. However, detailed analysis of the impact of the deal showed that, overall, the merger would reduce competition in the market and is more likely to lead to price rises than price cuts.

Roger Burnley, CEO of Asda, said he’s 'disappointed' with today’s ruling, saying: “We will continue to find ways to put money back into customers’ pockets and deliver great quality and service in an ever changing and demanding market.

“I have always been hugely aware that the last year has been an unsettling time for all of our colleagues and am immensely grateful for their commitment and dedication during that time. Our focus is now on the most important job we all have – delivering for our customers.”

The investigation follows news of the NFU saying the proposed merger would lead to increased pressure on farmers and reduce the choice and innovation of products available for the shopper.

NFU head of food and farming, Philip Hambling, highlighted how farmers were concerned whether the company could deliver its proposed 10% saving for shoppers without passing this additional pressure on to farmers.

Mr Hambling said: “Farmers and growers provide the British public with safe, traceable and affordable food for all incomes and it is vital that retailers and suppliers continue to invest in productive and progressive farm businesses.

“Continually squeezing margins can take away the ability of the food and farming industry to invest and improve quality, range and sustainability.”