Sainsbury's and Asda supermarket merger blocked by competition watchdog

Upon the disapproval from Britain’s competition watchdog, both supermarkets have ‘mutually agreed to terminate the transaction’.

Sainsbury Source: Bloomberg

Britain’s competition watchdog has blocked the merger of supermarket giants Sainsbury's and Asda, stating that the marriage would have resulted in lesser product options and higher prices in groceries.

‘The Competition and Markets Authority (CMA) has blocked the Sainsbury's-Asda merger after finding it would lead to increased prices in stores, online and at many petrol stations across the UK,’ the regulator said in a statement.

The transaction would also result in a ‘substantial lessening’ of competition both on a national level and a local level, the CMA said.

Upon the disapproval from Britain’s competition watchdog, both supermarkets have ‘mutually agreed to terminate the transaction’.

A year ago, Sainsbury's and Asda revealed plans to a merger, in a bid to challenge and get ahead of Tesco, a British multi-national groceries and general merchandise retailer.

The deal was to have Sainsbury's acquiring a majority share of 58% in the combined group and Walmart taking up the balance.

In the report, the CMA said that shoppers in the United Kingdom (UK) and motorists would be worse off if Sainsbury's and Asda - two of the country's largest supermarkets - were to merge, argued the CMA, due to expected increases in prices of items, reductions in the quality and range of products available, as well as a poorer overall shopping experience.

Even though both supermarket giants have now taken the merger off the table, Sainsbury's chief executive Mike Coupe contended with the CMA’s views in a statement, stating that that the merger sought to ‘lower prices for consumers’, and added that the competition watchdog has ignored the 'dynamic and highly competitive nature of the UK grocery market’.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. All share prices are delayed by at least 20 minutes. Prices are indicative only.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.