UK Competition Watchdog Opens Formal Probe into Sainsbury, Asda Merger -- Update
August 23 2018 - 6:50AM
Dow Jones News
(Adds background information)
By Maryam Cockar
The U.K. competition regulator has launched a formal
investigation into the proposed merger between supermarket chains,
J Sainsbury PLC (SBRY.LN) and Asda Group Ltd. (AGP.YY), to asses
how the deal could affect U.K. shoppers.
The Competition & Markets Authority said Thursday that it
will begin the first phase of its investigation to see if the tie
up could lead to higher prices or poorer service for the country's
consumers.
On April 30, U.S. retailer Walmart Inc. (WMT) said it will sell
its U.K. arm, Asda, to rival Sainsbury in a deal worth 7.30 billion
pounds ($9.4 billion). If the merger is approved it would create
the largest supermarket group in the U.K.
The CMA said its investigation will consider whether the merger
could lead to less choice, and consequently higher prices or poorer
services for customers, across the range of products sold by both
companies. In addition to groceries, Asda and Sainsbury sell
electricals, toys, clothing and fuel.
The investigation will also examine whether the new enlarged
company could use its increased buying power to squeeze suppliers
and if this could have repercussions for consumers, the CMA
said.
Sainsbury and Asda have both asked the CMA to move more quickly
to the in-depth second phase of the inquiry through a "fast-track"
process and the regulator said that it expects to accept this
request unless it receives any objections.
The CMA is inviting views by Aug. 31 on how the merger could
affect competition.
On Wednesday, the Times of London reported that Martin Walker,
U.K. equities fund manager at Invesco Perpetual, Sainsbury's
third-largest shareholder, has backed the proposed merger as it
will help the company compete with rival Tesco PLC (TSCO.LN).
Write to Maryam Cockar at maryam.cockar@dowjones.com
(END) Dow Jones Newswires
August 23, 2018 07:35 ET (11:35 GMT)
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