UK Competition Authority to Probe Effect of Sainsbury-Asda Merger on Suppliers
16 October 2018 - 10:43PM
Dow Jones News
By Maryam Cockar
The U.K. competition watchdog is to examine the potential effect
on suppliers of the proposed merger of J Sainsbury PLC (SBRY.LN)
and Asda Group Ltd., as well as consider the affect of growing
competition from discount grocers.
The Competition and Markets Authority said Tuesday that it will
look at whether the enlarged group could use its increased buying
power to squeeze suppliers and if this could have a possible
knockon effect for consumers.
It said suppliers might not be able to innovate as much or could
have to charge higher prices to rivals that would compete with the
merged company.
The CMA said it will assess competition from discount retailers
such as Aldi and Lidl, which have expanded significantly in the
U.K. in recent years, and examine whether the merger would reduce
competition.
The CMA will also consider competition from B&M European
Value Retail SA (BME.LN) and online-only retailers such as Ocado
Group PLC (OCDO.LN) and Amazon (AMZN).
In April, U.S. retail giant Walmart (WMT) said it would sell its
U.K. arm, Asda, to Sainsbury in a deal that valued the grocer at
about 7.3 billion pounds ($9.59 billion). If the tie-up is approved
it would create the largest supermarket in U.K.
In September, the CMA referred the merger for an in-depth
investigation and recently said that it has identified 463 areas in
the U.K. where the two grocery chains overlap.
The CMA said it expects to issue its provisional findings early
next year, ahead of the deadline for its final decision on the
proposed merger on March 5.
Write to Maryam Cockar at maryam.cockar@dowjones.com
(END) Dow Jones Newswires
October 16, 2018 07:28 ET (11:28 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
J Sainsbury (QX) (USOTC:JSAIY)
Historical Stock Chart
From Jul 2024 to Aug 2024
J Sainsbury (QX) (USOTC:JSAIY)
Historical Stock Chart
From Aug 2023 to Aug 2024