The Competition and Markets Authority (CMA) has notified Home Retail Group and Sainsbury’s that it will be launching an inquiry into the planned takeover.
The first stage of the investigation will involve a consideration of comments concerning the deal over the next two weeks. The CMA must decide by 25 July whether a full assessment is necessary.
The inquiry is like to delay the completion of Sainsbury’s’ £1.4bn takeover deal due to take place later in the summer.
The CMA said it must address whether Sainsbury’s plans will create “a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”
The competition regulator has the authority to terminate the deal or order the sale of some stores if any local competition concerns are raised.
The current deal would create a £6bn non-food empire and will excel the business into competition with Marks & Spencer, John Lewis and possibly Amazon.
Sainsbury’s noted that after the full takeover of Home Retail Group, there will be a total of more than 2,000 sites including concessions and click and collect points. However, the supermarket chain has forewarned the closure of up to 200 locations.
“We are pleased that the CMA review process into Sainsbury‘s proposed offer to buy Home Retail Group is progressing” said Sainsbury’s.
“The combination of both businesses will create a multi-product, multi-channel proposition with fast delivery networks, benefiting customers by accelerating our strategy to give them what they want, where and when they want it.
“We look forward to the successful completion of the deal”.
Last week, the CMA decided that Ladbrokes and Gala Coral may have to sell around 400 stores for their partnership to be accepted.