JSAIY J Sainsbury Plc (QX)

   By Carlo Martuscelli 
 

J Sainsbury PLC (SBRY.LN) responded to a report made by the U.K.'s competition watchdog on its proposed merger with grocer Asda Group Ltd. on Tuesday, promising that a deal would deliver lower prices to consumers.

The British supermarket retailer said that it, along with Asda, strongly disagreed with the findings of the Competition and Markets Authority and accused the regulator of having made significant errors in its analysis of the proposed deal.

In February the CMA made public its reservations to the proposed purchase by Sainsbury of Walmart Inc.'s (WMT) British grocery unit, threatening to scuttle the GBP7.3 billion deal.

In its response to the CMA, Sainsbury said that a merger would benefit British consumers by lowering the cost of everyday goods. It committed, by the third year after the deal was complete, to delivering 1 billion pounds ($1.3 billion) of lower prices annually. The FTSE 100-listed company also said it would also invest GBP300 million in the first year of the combination, as well as a further GBP700 million over the next two years, with the aim of reducing prices on common items by around 10%.

"Sainsbury's and Asda strongly encourage the CMA to recognize that there is a clear benefit to consumers from combining the two companies," the company said.

Sainsbury said it would deliver the price savings to consumers by paying suppliers less, expanding its Argos-brand stores into Asda, and jointly buying shared goods and reducing central costs.

The CMA is expected to publish its final report by April 30, Sainsbury said.

Write to Carlo Martuscelli at carlo.martuscelli@dowjones.com

(END) Dow Jones Newswires

March 19, 2019 06:47 ET (10:47 GMT)

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