Sainsbury’s, Asda merger blocked by regulator

LONDON (BBC News): The proposed merger between Sainsbury’s and Asda has been blocked by the UK’s competition watchdog over fears it would raise prices for consumers. The Competition and Markets Authority (CMA) also said it would raise prices at the supermarkets’ petrol stations and lead to longer checkout queues.

Sainsbury’s boss Mike Coupe said the regulator was “effectively taking £1bn out of customers’ pockets”. But he said the supermarkets had agreed to end the deal.

Asda boss Roger Burnley said he was disappointed: “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.”

The deal would have created the UK’s biggest supermarket chain, accounting for £1 in every £3 spent on groceries. Sainsbury’s and Asda had said the planned tie-up would have cut their costs, allowing them to lower prices for consumers across the UK.

Analysts also believed it was designed to help the two supermarkets counter the rise of discounters Aldi and Lidl in the increasingly competitive grocery market. Earlier this year, Sainsbury’s and Asda, which is owned by US retail giant Walmart, promised to sell between 125 and 150 of their supermarkets to allow the merger to proceed, along with some petrol stations and convenience stores.

They also pledged to bring in £1bn of price cuts for consumers if the deal went ahead, and be held to this by an independent guarantor.