The CEOs of Sainsbury’s and ASDA will be questioned by a British parliamentary committee ahead of their proposed merger, amid concerns the deal could negatively impact farmers, suppliers and consumers.
Sainsbury’s chief executive Mike Coupe and ASDA chief Roger Burnley will appear before the Environment, Food and Rural Affairs Committee (EFRA) on June 20, and MPs on the committee will seek to find out how suppliers will be treated by the merged company.
Neil Parish MP, the chair of EFRA said: “Grocery retailers do not have a great record of treating their suppliers well, and some of them are cautious about the proposed Sainsbury’s and Asda merger.
“My committee is holding this session to investigate how the biggest potential shake-up of the grocery market in recent years could affect British farmers and suppliers, as well as consumers.”
Sainsbury’s and ASDA agreed to merge earlier this year, and the merged business would overtake Tesco as the UK’s largest supermarket.
This has led to competition concerns, and the deal is currently being investigated by the UK’s Competition and Markets Authority (CMA).
Parish announced his concerns about the merger to the CMA in a letter last month, highlighting the market dominance the merger could create.
In the letter he said: “The cost savings being promised through this merger must not come through squeezing those further down the supply chain.
“I am also concerned that with two supermarkets taking up around 60% of the market, suppliers would be more reluctant to raise complaints about unfair practices.”
Meanwhile, the National Farmers’ Union (NFU) formally expressed its concerns about the proposed merger to the CMA last week, amid fears that the deal will negatively impact farmers.
Terry Jones, the director general of the NFU said: “The consolidation of retail buying power has been of great concern to our members for many years.
“If buyers working for this enlarged business abuse its market power and make unreasonable demands on suppliers by transferring excessive risk and unexpected cost to suppliers, which in turn damages their ability to innovate and invest, then ultimately this will impact on choice and availability for shoppers.”
© FoodBev Media Ltd 2018
World Beverage Innovation Awards are now open!
Do you have a beverage product worthy of an innovation award? Then you’re invited to enter the World Beverage Innovation Awards. Click here to find out more.