The Competition and Markets Authority has confirmed the start of a formal investigation into the proposed merger between J Sainsbury plc and Asda Group Ltd, which was announced on April 30.
Since then it has been gathering information to start the first phase of the formal investigation, which will look at the competitive impact on UK shoppers – the possibility of less choice, higher prices, and poorer service; plus to what extent increased buyer power will put a damaging squeeze on suppliers and stifle innovation.
Apart from their sizable grocery, online and non-food businesses, they are also significant fuel retailers – Asda with 317 forecourts and Sainsbury’s with 311, giving them a combined fuel market share of around 18%.
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.”
Sainsbury’s and Asda have asked the CMA to move more quickly to the in-depth (Phase 2) part of the inquiry through a ‘fast-track’ process.
The CMA expects to accept this request unless it receives any valid objections to the use of the fast-track process.
The CMA is now inviting views by 31 August on how the merger could affect competition. This follows the preliminary invitation to comment launched at the start of the information gathering period. Further opportunities to submit views will also be provided during the Phase 2 investigation.