Sainsbury’s-Asda merger sent for in-depth investigation

The UK’s Competition and Markets Authority (CMA) said on Wednesday the proposed merger of J Sainsbury and Asda Group is being referred for an in-depth Phase 2 investigation.

Sainsbury’s announced on April 30 it agreed to buy Walmart’s Leeds-based subsidiary Asda for about £7.3 billion in cash and shares to create the UK’s largest supermarket group by market share and overtake Tesco.

In August, the CMA opened its initial Phase 1 investigation into the merger and announced the companies had requested a fast-track referral to Phase 2.

The CMA has now confirmed that the deal “raises sufficient concerns” to be referred for a more in-depth review.

“The companies are two of the largest grocery retailers in the UK and their stores overlap in hundreds of local areas, where shoppers could face higher prices or a worse quality of service,” said the CMA.

“These concerns will be considered further in the Phase 2 investigation, along with other issues raised so far with the CMA – including those relating to fuel, general merchandise (such as clothing) and increased ‘buyer power’ over suppliers.”