Sainsbury’s Asda merger facing review by the Competition and Markets Authority

Sainsbury’s proposed merger with Asda is “likely to be subject to review”, the Competition and Markets Authority (CMA) confirmed this morning.

Sainsbury’s chief executive Mike Coupe said this morning that the supermarket has asked the CMA to fast-track the deal to a phase two in-depth probe, and expects the watchdog will be minded to keep all of the stores trading.

The CMA said that in major mergers it is typical for the firms to engage in pre-notification discussions with the watchdog to ensure they are supplying the information it will need before a formal investigation can get underway.

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Once the CMA’s formal investigation begins, an initial phase one review then gets underway for up to 40 days, assessing whether the deal reduces competition and choice for shoppers.

The deal could then be referred to a phase two investigation lasting up to 24 weeks if a potential reduction in competition is identified, unless the merging parties offer proposals to tackle any competition concerns. Firms can also request that the deal be fast-tracked to phase two.

A phase two investigation can result in a merger being cleared, prohibited or allowed to proceed, subject to certain conditions, such as the sale of parts of one or both businesses.

The news comes after Sainsbury’s provided more detail on the proposed tie-up this morning, with Asda owner Walmart holding 42 per cent of the issued share capital of the combined business and receiving nearly £3bn of cash, valuing Asda at £7.3bn.

The firms said the new business would mean lower prices by around 10 per cent on “many of the products customers buy regularly”.

The merged business would be led by Sainsbury’s boss Mike Coupe, and chaired by the supermarket’s chairman David Tyler.

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