The Competition and Markets Authority (CMA) is to launch a full in-depth investigation into Sainsbury’s proposed takeover of Asda.
The main areas of concern the CMA will address in its investigation of the deal, which was first announced in April, will include whether it would result in increased prices and reduced service.
According to the competitions watchdog, both supermarket giants already have hundreds of stores overlapping each other in parts of the UK. Sainsbury’s and Asda may have to sell some of their stores to competitors to address these concerns.
The CMA said in a statement: “These concerns will be considered further in the Phase 2 investigation, along with other issues raised so far with the CMA – including those relating to fuel, general merchandise and increased buying power over suppliers.”
However, when the deal was first announced, Sainsbury’s chief executive Mike Coupe pledged to lower the prices of everyday goods across stores by up to 10%. Sainsbury’s and Asda plan to complete the takeover by next summer.
The latest stage of the CMA’s investigation comes amid a number of mergers over the last two years, which include Tesco-Booker, Co-op Nisa and Today’s Group-Landmark Wholesale.
For more on the Sainsbury’s-Asda merger, read the September 28 issue of RN.
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