The National Farmers’ Union (NFU) has formally expressed its concerns about the proposed Sainsbury’s-Asda merger to the UK’s Competition and Markets Authority (CMA) amid fears that the deal will negatively impact suppliers.
Terry Jones, the director general of the NFU, submitted a letter to the CMA in which he outlined concerns that the merger would have a negative effect on competition and consumer interests, as he said that the merged company could abuse its market power to make unreasonable demands to suppliers.
Sainsbury’s and Asda agreed to merge earlier this year, and Kantar Worldpanel estimates that the merged company would account for a combined share of 31.4% of the UK grocery market.
The CMA confirmed last month that it would investigate the proposed merger and invited parties to comment on the deal if they thought the deal will harm competition, an offer which the NFU has now taken.
In the letter, Jones said: “Farmers and growers form the foundations of grocery supply chains – providing the British public with safe, traceable and affordable food for all incomes.
“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.
“From recent reports, we also understand that ministers in both BEIS and Defra have called for the CMA to consider the impact on the supply chain and especially on small suppliers.
“The NFU welcomes these calls and we have asked the CMA to outline how they will reflect this in their investigation.
“Officially registering our interest in this merger with the CMA is an important first step.”
Jones added that the NFU will undertake its own modelling process to examine the effects the merger could have on farm businesses and their offerings to consumers.
© FoodBev Media Ltd 2020
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