UK: Regulator condemns Sainsbury’s-Asda deal

Britain’s competition regulator has dealt a blow to Sainsbury’s planned US$9.5 billion takeover of Walmart’s Asda, stating the supermarket groups are unlikely to be able to address its “extensive” concerns about the deal.

The Competition and Markets Authority (CMA) stated the proposed acquisition could result in consumers facing “higher prices, reduced quality and choice, and a poorer overall shopping experience across the UK,” and expressed skepticism that selling stores alone could fix those problems.

Walmart-owned Asda is the UK’s third-largest supermarket chain, while Sainsbury’s is second. The takeover, agreed in April, would create the market leader, overtaking Tesco. The companies have insisted the combination would lead to lower prices.

The CMA disagreed, identifying 629 areas where there could be a substantial lessening of competition in supermarkets, more than the 463 it identified in its initial investigation,  and a further 290 areas where online competition could be reduced. There were smaller overlaps in convenience stores, where Asda is not a big participant, but it cited 132 locations where competition in petrol and diesel retailing could be reduced.