Sainsbury and Asda merger blocked by CMA

By rotide
Created 26/04/2019 - 12:46

The Competition and Markets Authority have stepped in to stop the creation of what would have become the largest Supermarket chain in the UK.

Good news for the UK consumer, as the CMA are not there to let non competitive conglomerates be created and both parties to the proposed merger have backed off of the deal very quickly. They must have thought that the involvement of the CMA was highly likely as did analysts but Sainsbury shares dropped 6% on the news as investors mull over the future for this 150 year old retailer.

Cost base reduction was the motivation for the bringing together of around 2,000 supermarkets and petrol outlets across the UK and in theory this would be passed on to consumers, with guarantees.

Given the way supermarket prices are behaving ahead of Brexit, with week to week prices of product lines moving 20% to 30% and the standard product weight also fluctuating, to hide substantial price rises, then consumer trust that the merged giant will stick with its lower price promises is non-existent. Rather like expecting the big 6 Energy companies to lower their rates when the price of oil has halved. Not going to happen.

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