Aldi and Lidl’s affect on the UK’s grocery market will be a key consideration in the Competition and Markets Athority’s (CMA) judgement on the proposed Sainsbury’s-Asda tie-up.
Today the CMA published its Issues Statement laying out the key areas it will focus on in its investigation into whether the merger will negatively impact competition in the sector.
It follows news last month that the watchdog was progressing its investigation into the proposed £7.3 billion tie-up to the more detailed Phase 2, stating that it could mean a “substantial lessening of competition (SLC)” in 463 local areas.
The areas laid out in its Issues Statement included the impact a merger could have on consumers and whether it would lead to “higher prices, a poorer shopping experience, or reductions in the range or quality of products offered”.
It added that as part of this, it will consider the impact of “competition presented by newer or growing retailers including Aldi and Lidl”.
Another key area the watchdog will focus on is the potential bearing on suppliers, which has been an issue of contention in the industry ever since the deal was proposed in April.
Many have raised concerns that the new entity’s increased buying power would allow it to squeeze suppliers, and the watchdog will investigate whether it will mean suppliers are less able to innovate or are forced to charge higher prices.
“Millions of people shop at Asda and Sainsbury’s every week, so it is essential we carry out a thorough investigation into their proposed merger,” chair of the CMA’s independent inquiry group Stuart McIntosh said.
“Our job is to find out whether the merger will result in people paying more or being faced with less choice or a poorer-quality shopping experience.
“Today, we are setting out a number of areas that we expect to look at as part of our investigation. We welcome views on the effects of the merger and will carefully consider any evidence that we receive.”
The deadline for responses to its Issues Statement has been set for October 30.