UK’s CMA Likely To Block Sainsbury Asda Merger, Shares Plummet

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The shares of Sainsbury have taken a hit of 15% following the UK competition watchdog casting doubts on its plans of buying Asda. Customers are expected to see higher price levels and lesser choice in case there is a combination of the two grocers and the same was communicated by Competition and Markets Authority (CMA).

According to CMA, it could potentially block this deal or even force a huge number of store outlets or even some major brand names to be sold. However, it was also mentioned that the chains are likely to face difficulty in addressing these concerns. These results were vehemently condemned by Saintsbury’s boss, who termed them as “outrageous”.

In the provisional report about this proposed merger, the CMA went on to state that the merger may potentially cause a shopping experience for the worse for customers. Stuart McIntosh, who is a part of the independent group of inquiry of the CMA, said that it had discovered extremely significant concerns of competition in certain areas – which include shopping of grocery in supermarkets, shopping of grocery online as well as the petrol stations of companies.

He further added that once one is able to recognize that concerns of competition are based quite broadly, compiling a package of relevant measures to address these concerns is most likely to prove to be extremely complex and challenging. However these claims were refuted completely by the firm itself. The Chief executive of Sainsbury, Mike Coupe chose to describe the analysis conducted by the CMA to be “fundamentally flawed”. He also assured that his company will take strong steps and make strong representation about the analysis regarding its blatant inaccuracy and absence of objectivity.

Speaking to BBC, Coupe said that goalposts have been shifted, the ball’s shape has been changed and the playing field has been made different, while making the analysis, deeming it totally outrageous.