Politicians urge investigation as Sainsbury's and Asda reveal deal talks

The competition watchdog is being urged to investigate the possible merger of the two supermarket retailers amid concerns over consumer choice. Picture: PA

The creation of a supermarket giant as part of a £10 billion deal, which could be announced as soon as today, has also raised fears over the impact it may have on jobs.

If Sainsbury’s and Asda are to merge, together they would have a bigger share in the grocery market than current sector leader Tesco.

Liberal Democrat leader Sir Vince Cable, the former business secretary, said the Competition and Markets Authority (CMA) “must investigate” any deal after it emerged at the weekend that the companies were in advanced talks.

Shadow business secretary Rebecca Long-Bailey echoed this, warning the merger risks “squeezing what little competition there is in the groceries market even further”.

Sir Vince said the CMA should force the companies to sell off stores if the merger meant the new giant was dominant in a particular area, telling the watchdog’s new chief, Andrew Tyrie, to “get tough with monopolies”.

Ms Bailey warned that, in the absence of proper vetting, it would be “British shoppers that suffer from rising prices and British workers that may be fearing for their jobs”.

It is understood that any investigation by the CMA would only be announced once an intention to merge was formally unveiled.

The latest statistics show that Tesco has a 25 per cent grocery market share, while Sainsbury’s has 13.8 per cent and Asda has 12.9 per cent. Together, they would move ahead of Tesco, with 26.7 per cent of the grocery market.

The merger would have to be approved by the CMA, because the two entities are the second- and third-largest grocery retailers in the UK.

Some expect that a deal could be approved after the CMA’s decision to allow Tesco to take over Booker, the UK’s largest grocery wholesaler in a deal worth £3.7 billion.

News of the potential deal also sparked concern among trade unions, which demanded urgent meetings with Salisbury’s and Asda chiefs.

Tim Roache, GMB general secretary, said: “Our first priority is to safeguard the job of every single Asda member, both in stores and in distribution. We are demanding an urgent meeting with Asda to get the answers and assurances our members need and deserve.

“GMB will be making sure the voices of supermarket workers are not lost amidst all the talk of mergers and acquisitions. We should never forget these companies’ empires are built upon the hard work of their employees.”

Asda is owned by the world’s largest supermarket retailer, American firm Walmart, and it is not yet clear how the deal would be structured.

One option is Sainsbury’s absorbing Asda stores, while Walmart takes a large stake in the combined group.

In a statement yesterday, Sainsbury’s said: “Sainsbury’s confirms that it and Walmart Inc are in advanced discussions regarding a combination of the Sainsbury’s and Asda businesses.”