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Competition authority throws Sainsbury’s-Asda merger up in the air

Sainsburys2

UK supermarket chain Sainsbury’s proposed takeover of Walmart’s Asda is in doubt after Britain’s competition authority said it was unlikely the supermarket groups could address its “extensive” concerns about the deal.

On Wednesday the Competition and Markets Authority (CMA) said its provisional view was the deal should be blocked, require the sale of a large number of stores, or even one of the brands.

“The CMA has provisional concerns that the merger could lead to a substantial lessening of competition at both a national and local level,” the statement read.

“The combined impact means that people could lose out right across the UK and that the deal could also cost shoppers through reduced competition in particular areas where Sainsbury’s and Asda stores overlap”.

The CMA raised concerns that the deal could lead to higher prices, a poorer shopping experience and reductions in the range and quality of products offered.

In a joint statement Sainsbury’s and Asda said the CMA findings “fundamentally misunderstand how people shop in the UK today and the intensity of competition in the grocery market”.

“The CMA has moved the goalposts and its analysis is inconsistent with comparable cases.

“We are surprised that the CMA would choose to reject the opportunity to put money directly into customers’ pockets, particularly at this time of economic uncertainty.”

The companies said they will continue to press their case in the coming weeks.

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