CMA launches competition probe for Asda-Sainsbury merger

The Competition and Markets Authority (CMA), the UK’s competition watchdog, has begun an investigation into the merger between the retail supermarkets, Sainsbury’s and Asda.

CMA has launched the investigation to discover if the merging of the companies will leave UK consumers will less choice and raised prices.

The watchdog is also concerned that the proposed merger, which has been valued at £12bn (US$15.4bn), could affect small businesses that supply to the retailers.

Sainsbury’s and Asda are the second and third largest supermarkets in the UK respectively.

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Following the merger, the firms would create the largest supermarket in the country with 31.4% of the grocery market and a total of 2,800 stores.

The US retail firm, Walmart, acquired Asda in 1999, paying £2.20 ($2.82) per share – valuing Asda at £6.7bn ($8.6bn). As part of the merger agreement, Walmart will own 42% of the merged business.

“About £190bn is spent each year on food and groceries in the UK, so it’s vital to find out if the millions of people who shop in supermarkets could lose out as a result of this deal,” stated Andrea Coscelli, CEO of CMA.

“We will carry out a thorough investigation to find out if this merger could lead to higher prices or a worse quality of service for shoppers and will not allow it to go ahead unless any concerns we find are fully dealt with.”

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