You are here: Home - Household Bills - News -

Asda Sainsbury’s deal blocked on price rise worries

Written by:
The UK regulator has blocked the Sainsbury’s-Asda merger, saying it could lead to higher prices in stores, online and at petrol stations.

The Competition and Markets Authority (CMA) said UK shoppers and motorists would be worse off if the deal went ahead with higher prices, plus reductions in the quality and range of products available, and a poorer overall shopping experience.

The deal would results in a “substantial lessening of competition at both a national and local level for people shopping in supermarkets.
This would mean shoppers right across the UK would be affected, not just in the areas where Sainsbury’s and Asda stores overlap”.

Stuart McIntosh, chair of the inquiry group, said: “It’s our responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week. Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers.

“We have concluded that there is no effective way of addressing our concerns, other than to block the merger.”

The Group said it had taken into account the companies’ statement they would cut some prices, but overall, the merger would reduce competition in the market and was therefore more likely to lead to price rises than price cuts.

Reputation blow

Tom Stevenson investment director from Fidelity Personal Investing’s share dealing service said: “Confirmation that the competition watchdog has blocked Sainsbury’s planned merger with Walmart-owned Asda will surprise no-one after its forthright interim report in March made clear its deep reservations about the deal. Mike Coupe, Sainsbury’s chastened boss, will put a brave face on things as he announces results next week but this is a blow to his reputation and the company’s prospects.

“Sainsbury’s will need to deliver a convincing plan to rebuild sales and profits if it is to avoid further weakness in its battered shares, although these have already largely priced in today’s decision by the Competition and Markets Authority. The stock has not been lower since the late 1980s. Sainsbury is the sector’s laggard today, struggling to keep up with recovering Tesco and the German discounters Aldi and Lidl, which have won over the middle classes with their narrow but cheap ranges.

“The wait for better times is eased by a decent forecast dividend income but better times may be some way off.” Sainsbury’s shares were down over 6% in early trading.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Everything you wanted to know about ISAs…but were afraid to ask

The new tax year is less than a fortnight away and for ISA savers or investors, it’s hugely important. If yo...

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week