Retail

UK Watchdog Blocks Asda And Sainsbury’s Merger

Sainsbury's

With concerns that a merger between Asda and Sainsbury’s would raise prices for shoppers, the arrangement has been blocked by the competition watchdog in the United Kingdom. The Competition and Markets Authority (CMA) said the deal would cause longer checkout lines and make prices higher at the gas stations of the supermarkets, the BBC reported.

With the arrangement, the largest supermarket chain in the U.K. would have been created, comprising £1 for each £3 spent on grocery items. The companies had said the potential merger would have lowered their costs and enabled them to cut prices for shoppers. At the same time, analysts have believed that the deal was designed to help the companies contend with Lidl’s and Aldi’s rise.

Asda President and CEO Roger Burnley said, according to the report, “We were right to explore the potential merger with Sainsbury’s, which would have delivered great benefits for customers and supported the long term, sustainable success of our business.” The CMA, however, contended that the deal would lower competition locally and nationally. Sainsbury’s has over 1,400 shops in the country, with roughly 800 as C-stores, and Asda has over 600.

The news comes as it was reported in February that it appeared that the arrangement to merge Sainsbury’s with Walmart-owned Asda could be in fatal trouble following a Competition and Markets Authority ruling on a deal that would have created the U.K.’s largest supermarket chain with a $15.6 billion deal.

The regulator said in a statement, it was reported at the time, “The CMA has provisionally found extensive competition concerns as part of its in-depth investigation.” At the time, it was reported that the ruling was widely criticized by some as out of touch with the needs of the retail landscape. Many felt it would lead to the blocking of the arrangement in its entirety or conditioned around the sale of a significant number of locations from one or both brands.

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