CMA Refers Sainsbury-Asda Merger for In-Depth Investigation
September 19 2018 - 1:55AM
Dow Jones News
By Ian Walker
The U.K. Competition and Markets Authority said Wednesday that
it will refer J Sainsbury PLC's (SBRY.LN) 7.30 billion-pound ($9.61
billion) acquisition of Asda for a further in-depth phase 2
investigation, saying the deal raises sufficient concern to warrant
the extra probe.
"The companies are two of the largest grocery retailers in the
U.K. and their stores overlap in hundreds of local areas, where
shoppers could face higher prices or a worse quality of service,"
the CMA said.
It said that an "issues statement" setting out in detail what
the inquiry group expects to investigate will be published in the
coming weeks.
On April 30, U.S. retailer Walmart Inc. (WMT) said it will sell
its U.K. arm, Asda, to rival Sainsbury. If the merger is approved
it will create the largest supermarket group in Britain.
The CMA began the first phase of its investigation last month to
see if the tie-up could lead to higher prices or poorer service for
the country's consumers.
It said at the time that the investigation would 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 electrical products, toys, clothing and fuel.
The investigation will examine if the new enlarged company could
use its increased buying power to squeeze suppliers and if this
could have repercussions for consumers, the CMA said in August.
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.
Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749
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(END) Dow Jones Newswires
September 19, 2018 02:40 ET (06:40 GMT)
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