The Competition and Markets Authority (CMA) has officially launched its investigation into the landmark £12 billion merger between Asda and Sainsbury’s.
After plans for the deal, which would create a newly combined entity with an annual turnover of £51 billion, were revealed in April the CMA has been gathering information it needed to start a formal investigation.
A Phase 1 probe will now be launched into the proposed merger aiming to assess whether it will pose a threat to competition within the grocery sector.
It will also determine whether the merged company, set to represent the UK’s largest grocer, will have a negative effect on suppliers, will affect the amount of choice shoppers will have or will lead to higher prices.
“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,” CMA chief executive Andrea Coscelli said.
“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.”
Asda and Sainsbury’s have requested that the CMA “fast-track” their Phase 1 probe allowing it to move more quickly to Phase 2, which the regulator is anticipated to accept unless valid objections are submitted.
It has requested that any views regarding how the merger will affect competition to be submitted by August 31.
The news follows intense speculation on what the merger could mean for suppliers, customers and the two grocers.
A report earlier this week suggested that for the deal to go ahead, nearly 300 Sainsbury’s and Asda stores would need to close, significantly more than previously thought.
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.