Regulator outlines investigation into Asda-Sainsburys merger

The Competition and Markets Authority (CMA) has revealed the key areas it is investigating into the £15bn proposed merger of Leeds-headquartered Asda with Sainsburys.

The CMA initially referred the deal for an in-depth (Phase 2) investigation on 19 September 2018.

The ‘Issues Statement’, released today, sets out the key areas the CMA expects to scrutinise, at both a local and national level. This includes groceries, bought both in-store and online; fuel; and other items such as toys, small electricals and children’s clothing.

The CMA will assess whether the merger could lead to a worse outcome for shoppers through higher prices, a poorer shopping experience, or reductions in the range or quality of products offered.

The impact of competition presented by newer or growing retailers, including Aldi and Lidl, will be considered alongside these issues.

In addition, the CMA will examine any potential efficiencies that might result from the merger and whether such savings might be passed on to shoppers.

The CMA will also look at whether the merged company could use its increased buyer power to squeeze suppliers and if this could have a potential knock-on effect for shoppers.

Sainsburys currently operates 606 supermarkets, 815 convenience stores, 311 petrol filling stations and an online grocery business. The supermarket giant, which last year had a turnover of £28.5bn, also operates retail banking services and owns Argos.

Asda, which is owned by American giant Walmart, has 584 grocery stores, 317 petrol filling stations and also operates Asda Money. Last year its turnover stood at £22.2bn.

Stuart McIntosh, chair of the independent inquiry group carrying out the in-depth investigation, 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.

“Today, we are setting out a number of areas that we expect to look at as part of our investigation. We welcome views on the effects of the merger and will carefully consider any evidence that we receive.”

The CMA said that its provisional findings will be unveiled early next year, ahead of the statutory deadline for its final decision on the 5 March 2019.

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