The formal investigation into the Sainsbury’s/Asda merger by the Competition and Markets Authority (CMA) has now begun, following speculation that hundreds of stores are set to close.
Since the announcement of the merger on 30th April, the CMA has been gathering the information needed to start its formal investigation.
It has announced it will now begin the first phase (known as Phase 1) of its detailed assessment into how the deal could affect competition for UK shoppers.
CMA’s investigation will consider whether the deal could lead to less choice, and therefore higher prices or worse quality services, across the range of products sold by both businesses.
CMA will also look at whether the merged company could use its increased buyer power to squeeze suppliers and whether this could have potential knock-on effects for shoppers – for example, through suppliers being less able to innovate or having to charge higher prices to stores that compete with the merged company.
Store closures
Up to 300 stores could be ‘forced’ to shut in the Sainsbury’s-Asda merger if the landmark deal is approved, according to new research.
A report by The Times has revealed that far more stores than previously thought could be in danger of having to shut their doors in order for the merger to be approved by the CMA.
At least 300 catchment areas have reportedly been identified, where the supermarkets could be told to offer disposal ‘remedies’ to reduce concerns about high local market share.
In roughly half of these areas, the big four rivals, Tesco and Morrisons, would be viable buyers to move into the vacant store spaces.
The other half could be snapped up by discounters Aldi and Lidl, whilst other grocers like Waitrose and Marks & Spencer would also be in the running.
An Asda spokesperson said: “Asda and Sainsbury’s will continue to operate as two separate retailers, and this proposed merger offers a great deal for customers. There are no planned store closures as a result of the proposed combination.”
Food Management Today has also contacted Sainsbury’s to confirm the reports, and is yet to receive a response.
