Sainsbury's and Asda merger 'could push up prices'

The Competition and Markets Authority (CMA) has released provisional findings from the second stage of its investigation into the merger, and has initial concerns that it could lead to a substantial erosion of competition at national and local level.

The CMA says possible options at this stage include blocking the deal, or requiring the two firms to sell off a "significant number" of stores and other assets to recreate the competitive rivalry lost through the merger. But it says its current view is that it is likely to be difficult for the companies to address its concerns.

It will publish a final report on the issue by 30 April 2019.

What is the planned merger?

Sainsbury's and Asda unveiled their £12 billion merger plan last April.

It's expected that the two brands would remain distinct should a merger go ahead, and Sainsbury's has repeatedly said it expects the deal to allow it to lower prices by about 10% on products customers buy regularly.

What does the CMA say?

Stuart McIntosh, chairman of the independent inquiry group carrying out the CMA investigation, said: "These are two of the biggest supermarkets in the UK, with millions of people purchasing their products and services every day.

"We have provisionally found that, should the two merge, shoppers could face higher prices, reduced quality and choice, and a poorer overall shopping experience across the UK."

What do Sainsbury's and Asda say?

A spokesperson for Sainsbury's and Asda said: "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.

"We will be working to understand the rationale behind these findings and will continue to press our case in the coming weeks."

Additional reporting by the Press Association.