Recent news of the proposed merger between the two of the UK’s largest supermarkets has led to calls for an investigation. Talks between Sainsbury’s, the second largest supermarket, and Asda, who are the third largest have already begun; and if it went ahead it would put the group ahead of the current market leader, Tesco.
According to the latest figures, Tesco has a 25% share of the grocery market in the UK. Sainsbury’s has 13.8% and Asda has 12.9%. If the two supermarkets were combined, their market share would be 26.7% of the UK grocery market.
Although the full details of the £10 billion deal are yet to be confirmed, Sainsbury’s Plc have confirmed that “advanced discussions” are already underway. It’s still unclear as to how the deal would be structured, but one possibility would be that Sainsbury’s would take on the current Asda stores, and Walmart would take a large share in the profits of the combined group.
Like most large mergers, the idea of two leading supermarkets joining together has been met with some concerns from politicians and consumer groups. There have been calls for the competition watchdog to start investigations over fears that the merger could lead to less competition and consumer choice, as well as job losses.
Liberal Democrat leader Sir Vince Cable, the former business secretary, said the Competition and Markets Authority (CMA) needs to investigate the deal further. He also warned that the CMA should force the two companies to sell some of their stores if it meant they were going to be too dominant in a certain area, urging the watchdog’s chief Andrew Tyrie to “get tough with monopolies”.
Shadow business secretary Rebecca Long-Bailey agreed, saying that the proposed merger could risk “squeezing what little competition there is in the groceries market even further”. She added: “It will be British shoppers that suffer from rising prices and British workers that may be fearing for their jobs if this goes ahead without adequate oversight and investigation.”
Workers’ unions have also demanded meetings with Sainsbury’s and Asda over fears that the merger could result in job losses. GMB general secretary Tim Roache said: “Our first priority is to safeguard the job of every single Asda member, both in stores and in distribution.”
“GMB will be making sure the voices of supermarket workers are not lost amidst all the talk of mergers and acquisitions. We should never forget these companies’ empires are built upon the hard work of their employees. Rest assured we will be exploring every available legal avenue to protect our members’ jobs,” he added.
In a statement, Sainsbury’s said: “J Sainsbury plc. notes the speculation concerning a possible combination with Asda Group Limited. Sainsbury’s confirms that it and Walmart Inc. are in advanced discussions regarding a combination of the Sainsbury’s and Asda businesses. A further announcement will be made at 7am on Monday, 30 April.”