Court rules CMA treated Sainsbury’s & Asda unfairly in probe

Sainsbury's Asda CMA

A court has found that the UK’s peak competitions watchdog treated Sainsbury’s and Asda unfairly in not allowing them more time to respond to evidence submitted as part of an investigation into their proposed £12 billion merger.

The grocery giants had applied to the Competition Appeal Tribunal for a judicial review of the Competition and Market Authority’s (CMA) investigation of their deal, which – if approved – would topple Tesco from its longstanding dominance in grocery market share.

As part of the judicial review application, Sainsbury’s and Asda wanted an additional 11 working days over the Christmas period to respond to a large amount of material, which they say was only recently provided to them by the CMA.

The retailers also argued that the current timetable did not give them nor the CMA “sufficient time to provide and consider all the evidence, given the unprecedented scale and complexity of the case”.

The CMA had declined the request and insisted its timeline was typical for an investigation.

The Competition Appeal Tribunal ruled on Friday that the timetables for responding to the materials and attending a hearing were unfair.

However, the tribunal did not rule on the new January 4 deadline date that the grocery retailers sought.

Instead, it ruled that the CMA would decide how much more time Sainsbury’s and Asda should have to respond.

“The CMA will now consider how much more time to give the parties,” a spokeswoman for the competition regulator said.

In a joint statement, Sainsbury’s and Asda said they were taking “this step reluctantly and look forward to re-engaging with the CMA and Panel and working constructively with them going forward”.

Shares in Sainsbury’s dropped as much as seven per cent amid fears the proposed merger could be rejected after it was announced last Wedesnday that it would challenge the CMA in the Competition Appeal Tribunal.

The news comes after a slew of recent reports in which suppliers and competing retailers have come forward to warn on the merger.

Tesco, Morrisons, Lidl and Waitrose have all expressed concerns about price rises and competition fairness while the National Farmers’ Union warned that the merger could reduce the choice and innovation of products and increase the squeeze on farmers.

When the proposed merger was first announced at the end of April, Sainsbury’s chief executive Mike Coupe said it would lead to £500 million in cost savings and further investment to lower prices by around 10 per cent on everyday items.

Supermarket groups and suppliers have been able to submit their views to the CMA since April.

It is expected to give its final ruling on March 5.

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