UK competitions watchdog outlines wholesaler and supplier concerns around Sainsbury’s Asda takeover

The UK’s competitions watchdog has released information about the concerns it has received about Sainsbury’s proposed takeover of Asda.

The Competition and Markets Authority (CMA) closed its preliminary invitation to comment about the takeover on 4 June. It had received submissions from supermarket groups, wholesalers, suppliers and trade associations.

Primary concerns raised were around the threat of Sainsbury’s and Asda working more closely together to limit the rivalry between the two brands, and the effect on smaller retailers as a result of increased buying power.

When the takeover was announced at the end of April, Sainsbury’s chief executive Mike Coupe pledged to reduce prices across core grocery lines by 10% if the deal is approved.

The CMA in its summary of submissions said: “Respondents put forward what they saw could be the consequence of the merger, including suppliers having to charge higher prices to smaller retailers to recoup lost profits due to lower prices charged to Sainsbury’s and Asda, or prioritising supply to the combined company over smaller retailers, leaving those retailers less able to compete.”

A formal investigation into the takeover will be opened by the CMA in the coming weeks. If approved, the combined business would become the market leader with a share of 31%. Tesco currently has the biggest share of 27.6%.