UK supermarket merger: how Sainsbury’s plans to address the CMA’s concerns

As part of the efforts to address the concerns raised by their supermarket merger in the UK, Sainsbury’s and Asda say they could sell off 150 of their stores.

The merger, which is worth £12 billion, has raised some concerns over competition. Some of the concerns raised last year when the merger was announced included damage to competition and the possibility of job losses.

According to the CMA’s investigation, there were 629 areas in the UK that could be at risk of limited competition as a result of the merger. Also, there were 290 other regions where competition would be greatly reduced, which would leave consumers worse off.

Sainsbury’s and Asda are the second and third largest supermarkets in the UK. If the merger is to go ahead, the company would have a 26.7% share of the UK’s grocery market – putting them ahead of the current leader, Tesco.

Sainsbury’s and Asda say, however, that if the merger is blocked altogether, it could mean higher prices for consumers. They then put forward the idea of selling between 125 and 150 of its supermarkets, as well as 32 petrol forecourts.

Sainsbury’s went on to point out that there could be issues with the report put forward by the CMA. For example, it doesn’t take into account the savings the supermarket plans to pass onto its customers.

According to Sainsbury’s, the £10 billion deal would result in savings of up to £1 billion for its customers – or savings to the equivalent of 10% of food and other everyday items.

Sainsbury’s boss Mike Coupe and Asda chief executive Roger Burnle said in a statement that the CMA’s proposals are “impossible to implement”.

He added: “Its analysis fundamentally misunderstands how people shop today as well as ignores the intensity of competition and the dynamism of the UK grocery market, which evolves on an almost weekly basis.”

“We have committed to £1 billion of lower prices for customers within three years of our businesses merging and proposed a remedy package that would satisfy any reasonable concerns.”

“We urge the CMA to properly reflect the evidence so that we can deliver savings for customers. We regret the uncertainty this process causes for our colleagues and want to reassure them that no stores would close because of this merger, with any divested stores run by a credible third party.”