Up to 300 Sainsbury’s and Asda stores may have to be disposed of if the landmark merger between the two grocers is approved, according to new research.
An analysis by The Times has revealed that far more stores than previously thought could be in danger of having to shut their doors in order for the merger to be approved by the Competition and Markets Authority (CMA).
By using modelling techniques typically used by the watchdog, at least 300 catchment areas have been identified where the pair could be forced to offer disposal “remedies” to alleviate concerns about high local market share.
In roughly half of these areas Big 4 rivals Tesco and Morrisons would be viable buyers to move into the vacant store spaces.
The other half are likely to be snapped up by discounters Aldi and Lidl, both of which have aggressive expansion drives. Other grocers like Waitrose and Marks & Spencer would also be in the running, but both have scaled back their store expansion programmes due to unsteady finances, while the Co-op is focusing on smaller convenience outlets.
The merger of the country’s second and third largest supermarkets would topple Tesco’s longstanding reign as the UK’s biggest grocer my market share.
Sainsbury’s-Asda’s revenues would also be £51 billion thanks to network of 2800 Sainsbury’s, Asda, Habitat, Argos and George stores.
When it was first announced at the end of April, Mike Coupe said the merger would lead to £500 million in cost savings and further investment to lower prices by around 10 per cent on everyday items.
The CMA has since confirmed that it was looking into the proposed deal and was in the “pre-notification” phase, which means it was in the midst of gathering information from Sainsbury’s and Asda before a formal inquiry could be launched.
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