British competition watchdog blocks Sainsbury’s and Asda merger

The £12 billion deal would have made the UK’s largest grocer

The £12 billion Sainsbury's and Asda tie-up would have created Britain’s largest grocer by market share, but it has been scrapped in response to the CMA’s ruling.  REUTERS

The British Competition and Markets Authority (CMA) has blocked a planned merger by Sainsbury’s and Asda, the second and third largest UK supermarkets.

Walmart, Asda’s US-based parent company, said in a statement that the £12 billion deal - which would have created Britain’s largest grocer by market share - had been scrapped as a response to the CMA’s ruling.

The CMA said that the deal would “substantially lessen competition in a number of markets in the UK”.

It added that the merger would have resulted in price rises, reduction in the quality and range of products available and overall a poorer shopping experience.

The verdict comes two months after the CMA first threw the proposed tie-up into doubt, warning in February that the merger could lead to "a substantial lessening of competition at both a national and local level”.

Sainsbury’s and Walmart announced negotiations about a possible merger in April 2018. Under the plans, Walmart would have owned 42% of the combined business which would have been led by the existing CEO of Sainsbury’s Mike Coupe.

Commenting on the proposed merger, Judith McKenna, CEO of Walmart International, said: “While we’re disappointed by the CMA’s final report and conclusions, our focus now is continuing to position Asda as a strong UK retailer delivering for customers. Walmart will ensure Asda has the resources it needs to achieve that.”

Ms McKenna then thanked the Asda team for “their incredible focus and approach” during the merger process.

Roger Burnley, CEO of Asda, commented: “We were right to explore the potential merger with Sainsbury’s, which would have delivered great benefits for customers and supported the long term, sustainable success of our business. We’re disappointed with their findings but will continue to find ways to put money back into customer’s pockets and deliver great quality and service in an ever changing and demanding market.”