Britain's competition regulator is starting a formal investigation into the proposed £7.3 billion deal to combine supermarket chains Sainsbury and Walmart's Asda.
The Competition and Markets Authority said it will begin the first phase of detailed assessment into how the deal could affect competition for British shoppers.
Competition
The investigation will look at whether the deal could lead to less choice, and therefore higher prices or worse quality services, across products sold by both companies, the regulator said.
The cash and shares deal would see Sainsbury's combine with Asda to overtake Tesco as Britain's biggest supermarket group.
The investigation would also look at whether the merged company could use its increased buying power to squeeze suppliers and whether this could have an effect on shoppers.
The combined group is seeking savings of at least £500 million, £350 million of which would come from savings when buying from suppliers.
The CMA's remit is to ascertain whether merger situations could result in a substantial lessening of competition. It is independent of government when making decisions on mergers.
Market Performance
Sainsbury's, Britain's second largest supermarket group, was once again the worst performer of the country's big four grocers over the last 12-weeks, according to Kantar Worldpanel.
Kantar’s market research found that sales at Sainsbury’s rose by 1.2% in the 12-week period, its fastest rate of growth since January, yet it still lagged behind potential partners Asda, as well as Morrisons and Tesco.
News by Reuters, edited by Checkout, additional reporting by Aidan O'Sullivan. Click subscribe to sign up for the Checkout print edition.
