CMA to probe whether Sainsbury's Asda merger will 'squeeze suppliers'

Will Green is news editor of Supply Management
24 August 2018

The Competition and Markets Authority (CMA) is to investigate the proposed merger of Sainsbury’s and Asda.

The investigation will include looking at whether the merged company will be able to use its buying power to “squeeze suppliers”.

The CMA said it would consider whether the deal, announced in April, would lead to less choice, higher prices or worse quality services. Concerns were expressed at the time that “supply chains will be hammered”.

“The CMA will also look at whether the merged company could use its increased buyer power to squeeze suppliers and whether this could have potential knock-on effects for shoppers – for example, through suppliers being less able to innovate or having to charge higher prices to stores that compete with the merged company,” said the CMA.

Andrea Coscelli, chief executive of the CMA, said: “About £190bn is spent each year on food and groceries in the UK so it’s vital to find out if the millions of people who shop in supermarkets could lose out as a result of this deal.

“We will carry out a thorough investigation to find out if this merger could lead to higher prices or a worse quality of service for shoppers and will not allow it to go ahead unless any concerns we find are fully dealt with.”

Sainsbury’s and Asda have asked the CMA to conduct the inquiry on a “fast-track” basis, bypassing an assessment stage and moving it to a full investigation.

The CMA is asking for comments by 31 August on how the merger could affect competition.

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