The merger between Sainsbury’s and Asda is already under scrutiny, with two parliamentary committees writing to UK’s competition watchdog.
The chairs of the Business, Energy and Industrial Strategy (BEIS) and Environment, Food and Rural Affairs (EFRA) committees have penned their concerns to the Competition and Markets Authority (CMA) regarding the market dominance the merger could create.
The deal, which was announced on Monday, will create a combined business with revenue of £51 billion. The UK’s largest grocery retailer, Tesco, turned over £51 billion in its last financial year.
The parliamentary committees have questioned the criteria that will be used to determine whether the merger will create local monopolies or require the stores to divest premises.
BEIS chair Rachel Reeves said: “This merger threatens customer choice, hands yet more power to mighty supermarket players and heaps more pressure on small and medium suppliers. The CMA needs to be a champion of consumers and it must look closely at the impact of this merger on the supply chain as well as the effect on competition in the supermarket sector.”
Neil Parish, chair of the EFRA committee, added: “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.”
Under the deal, Sainsbury’s and Asda will remain separate brands – stores will not be rebranded, and neither business will be subsumed into the other.
Sainsbury’s said it will cut prices by 10% and both companies have stressed there will be no store closures, despite the close proximity of some shops.
Since the deal was announced, industry experts have given their views on how it will transform the grocery retail industry in the UK.
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