Sainsbury Asda Merger Agreement
Had the CMA taken into account the proximity of Lidl, Aldi or Morrisons grocery stores before publishing the results of its first analysis, they would not have been able to draw any conclusions. The assertion that Sainsbury`s and Asda should sell 300 of their grocery stores for the merger to be considered reasonable no longer makes sense to provide the new and compelling evidence that has been produced through more thorough and objective analysis. The parties probably still expected to face competition problems in some local markets, for example by selling some branches to other retailers, but the CMA found that British retailers and motorists would likely be affected by the merger. This made it much more difficult for the parties to offer a solution that could solve these problems at the national level and ultimately led to a total ban on the agreement. It is not certain that the CMA will give it the advance or stop the agreement altogether. It has the power to prevent them from continuing if its investigation concludes that the transaction would constitute a “potential reduction of competition” in the UK food market. On the other hand, CMA may impose certain conditions to accept the agreement. Let`s delve deep into these two ideas to try to get a healthy perspective on what the merger of Sainsbury and Asda means for the food retail trade. The Competition Authority (CMA) has launched an investigation to understand the impact of the transaction on competition for the sector and its impact on customers. Through careful analysis, it was concluded that, contrary to business requirements, the step could lead to higher prices and reduce quality in-store and online. This is not the first time the CMA has stopped a supermarket merger. In 2003, the eventual acquisition of Safeway by Asda or Sainsbury`s was blocked due to the potential impact on domestic market share. The proposed transaction was authorized for Morrison, which had a smaller market share.