Sainsbury’s and Asda offer to sell 150 stores under merger plan

Sainsbury’s and Asda have offered to sell up to 150 stores as part of efforts to address competition concerns over their £12 billion merger, and claimed that shoppers would be deprived of lower prices should it be blocked.

Sainsburys has said the CMAs report contains 'significant errors', both legal and economic. Picture Michael Gillen

The supermarkets described the Competition and Markets Authority’s (CMA) provisional findings into the merger, which warned the deal could be blocked unless they sell off significant stores or even one of the brands, as “prohibition in all but name”.

They also put forward their own remedies to allay antitrust concerns, offering to sell between 125 and 150 supermarkets and 32 petrol forecourts.

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It represents a radical adjustment to the CMA’s calculation, which found 629 areas where there could be a substantial reduction in competition as a result of the tie-up, and a further 290 areas where online competition could be reduced.

The supermarkets’ submission said that the CMA’s remedy proposal is “impossible to implement”.

Sainsbury’s boss Mike Coupe and Asda chief executive Roger Burnley added: “We have asked the CMA to correct significant errors in its provisional findings.

“Its analysis fundamentally misunderstands how people shop today as well as ignores the intensity of competition and the dynamism of the UK grocery market, which evolves on an almost weekly basis.”

Sainsbury’s believes there are serious flaws with the competition watchdog’s report, and argues the tie-up will deliver £1bn in savings for shoppers, equating to a 10 per cent cut on everyday items.

Sainsbury’s has said the CMA’s report contains “significant errors”, both legal and economic.

The chief executives added: “We have committed to £1bn of lower prices for customers within three years of our businesses merging and proposed a remedy package that would satisfy any reasonable concerns.

“We urge the CMA to properly reflect the evidence so that we can deliver savings for customers.

“We regret the uncertainty this process causes for our colleagues and want to reassure them that no stores would close because of this merger, with any divested stores run by a credible third party.”

The CMA is expected to publish Sainsbury’s and Asda’s responses to its provisional findings imminently, and the antitrust body’s final report is expected by 30 April.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “The Sainsbury/Asda saga continues, and, as expected, Sainsbury is digging its heels in.

“At first glance, the proposals look like a decent compromise in response to the CMA’s previous ruling, however, the proposed number of store sales is unlikely to be enough to appease the competition regulator.

“This hasn’t come as a surprise, with Sainsbury previously being outspoken in calling the CMA’s findings unreasonable. The supermarkets are adamant the CMA’s investigation was laden with errors, so no one was really expecting them to agree to the suggestion of selling a larger number of stores – or even one of the brands.

“Looking ahead, the CMA has until 30 April to publish its final report. No one can be sure what the outcome will be, but there’s a fair chance today’s proposals simply won’t be enough to convince the watchdog that the merger between Asda and Sainsbury wouldn’t create a competition problem.

“Indeed, should the deal go ahead in its original form, it will create the UK’s largest supermarket – a massive partnership by any stretch. Unfortunately for Sainsbury and Asda, they aren’t being allowed to forget that with great power comes great responsibility.”