Investigation launched into supermarket merger

The CMA has launched a formal investigation into the proposed merger between Sainsbury's and Asda.

The two supermarkets proposed a merger in April.

Since the announcement of the merger on 30 April, the Competition and Markets Authority (CMA) has been gathering information on how the deal could affect competition for UK shoppers.

The 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. As well as being major retailers of groceries, both in-store and online, Sainsbury’s and Asda also compete to sell goods such as fuel, electricals, toys and clothing.

The 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.

Andrea Coscelli, chief executive of the CMA, said:“About £190 billion 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.

“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.”