The UK’s Competition and Markets Authority (CMA) has officially launched a formal investigation into the Sainsbury’s-Asada merger.
Earlier this year both Sainsbury’s and Walmart-owned Asada announced the merger of the two supermarket chains, with Sainsbury’s agreeing to pay Asada $5.741 billion in cash in return for a 42 per cent stake in the new business. However, the CMA’s is set to investigate whether or not the new merger will negatively impact UK consumers.
The investigation was initiated due to growing concerns that the potential merger could form a lack of completion in the market, leading to raises in prices for consumers and a reduction in service quality. The CMA will investigate if the deal will lead to growing costs, less choice for consumers and fewer options for supplies.
According to estimates from the Kantar Worldpanel the Sainsbury’s-Asada merger would mean that the combined companies would hold a market share within the UK of 31.4 per cent rivalling Tesco’s current 27.6 per cent stake in the market.
The investigation, which is currently in phase one, hopes to see if the merger would mean UK shoppers are losing out.
“About $3.7 billion is spent each year on food and groceries in the UK so it’s vital to find out if the millions of people who shop in supermarkets could lose out as a result of this deal. We will carry out a thorough investigation to find out if this merger could lead to higher prices or a worse quality of service for shoppers and will not allow it to go ahead unless any concerns we find are fully dealt with,” said Andrea Coscelli, chief executive of the CMA.