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CMA blocks Asda Sainsbury’s merger for next decade

Published: 11 July 2019 - Fiona Garcia
 

Having blocked the deal in April, the Competition and Markets Authority (CMA) has now issued an final order to its report, stating that neither of the grocers may acquire an interest in the other Asda for 10 years.

The ruling also applies to each of the entities within the Sainsbury’s, Asda or Walmart corporate group.

As an exception to the general prohibition, the order provides that the CMA may grant its written consent for a transaction between Sainsbury’s and Asda, “which would otherwise result in the creation of a relevant merger situation”.

An example of where such consent might be granted could be Sainsbury’s wishing to acquire a small number of assets from Asda, such as a single store, which would constitute a relevant merger situation but does “not give rise to competition concerns”.

Asda and Sainsbury’s were disappointed by the CMA’s decision to block its proposed merger back in April and accused the competition’s watchdog of taking savings away from shoppers, “effectively taking £1billion out of customers' pockets”.

However, the CMA was clear in its opposition of the deal, explaining it believed UK shoppers would be “worse off” if it was allowed to proceed, due to reduced competition in the market, price hikes on goods and a drop in quality. The authority had raised a number of concerns during its investigation and finally said there was no way to address those, other than to block the merger.

 

 

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