Sainsbury’s shares drop 7% amid Asda merger fears

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Sainsbury's shares

Sainsbury’s share price has taken a hit over the past two days after the retailer said it was seeking to delay an investigation into its proposed merger with Asda.

Yesterday the share value of the Big 4 grocer dropped as much as seven per cent after it applied for a judicial review of the Competition and Market Authority’s (CMA) probe into its proposed £12 billion merger with Asda.

The application, lodged on Wednesday with the Competition Appeal Tribunal, sought a review of the CMA timetable and process on the grounds of the investigation’s “unprecedented scale and complexity”.

Sainsbury’s and Asda asked the CMA for 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.

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 has denied the grocers’ request and said it would defend its position in court, and was “not willing to compromise on the thoroughness or objectivity” of the investigation.

It also insisted that its timeline was typical for an investigation.

Sainsbury’s said it would appeal against the decision.

The trial is set to take place today.

The news has since raised fears the proposed merger could be rejected when the competition watchdog hands down its final ruling next year.

It also comes after a slew of recent reports in which suppliers and competing retailers have come forward to warn on the proposed 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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