Sainsbury’s – Asda merger blocked by CMA

The UK Competition and Markets Authority (CMA) has blocked the merger between grocery giants Asda and Sainsbury’s, on basis that there will be less competition and prices will go up while quality falls.

Stuart McIntosh, chair of the inquiry group, said: “Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers.

“We have concluded that there is no effective way of addressing our concerns, other than to block the merger.”

Asda and Sainsbury’s announced the plans to merge in 2018 – it would have saved the companies £500 million in operational costs. In March they claimed that they would offer at least £1 billion in savings for consumers when the CMA indicated that prices would instead go up.

Responding to the CMA decision to block the merger, Sainsbury’s chief executive Mike Coupe said: ” The CMA’s conclusion that we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market. The CMA is today effectively taking £1 billion out of customers’ pockets.”

Judith McKenna, chief executive of Walmart International, said: “While we’re disappointed by the CMA’s final report and conclusions, our focus now is continuing to position Asda as a strong UK retailer delivering for customers. Walmart will ensure Asda has the resources it needs to achieve that.”

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