Sainsbury's-ASDA merger blocked by the regulator (Competition and Markets Authority) (CMA) 1) What type of market or industry are both supermarkets? Justify your answer clearly. 2) Do you think the reasons for a merger between ASDA and Sainsbury mentioned in the news are justifiable? Why did the supermarkets want to merge? The deal would have created the UK's biggest supermarket chain, accounting for £1 in every £3 spent on groceries. Sainsbury's and Asda had said the planned tie-up would have cut their costs, allowing them to lower prices for consumers across the UK. Analysts also believed it was designed to help the two supermarkets counter the rise of discounters Aldi and Lidl in the increasingly competitive grocery market. 3) The CMA provides economic justifications to the merger block by regulators in the UK. Do you think the justifications are reasonable?
Sainsbury's-ASDA merger blocked by the regulator (Competition and Markets Authority) (CMA)
1) What type of market or industry are both supermarkets? Justify your answer clearly.
2) Do you think the reasons for a merger between ASDA and Sainsbury mentioned in the news are justifiable?
Why did the supermarkets want to merge?
The deal would have created the UK's biggest supermarket chain, accounting for £1 in every £3 spent on groceries.
Sainsbury's and Asda had said the planned tie-up would have cut their costs, allowing them to lower prices for consumers across the UK.
Analysts also believed it was designed to help the two supermarkets counter the rise of discounters Aldi and Lidl in the increasingly competitive grocery market.
3) The CMA provides economic justifications to the merger block by regulators
in the UK. Do you think the justifications are reasonable?
Why was the CMA concerned?
But the CMA, which had previously raised concerns about the deal, said the merger would lessen competition at both a national and local level.
Sainsbury's has more than 1,400 shops in the UK, of which about 800 are convenience stores, while Asda has more than 600.
Stuart McIntosh, chair of the CMA's inquiry group, told the BBC's Today programme: "It would reduce competition in supermarkets and online grocery shopping and at the companies' petrol stations.
"We think that is likely to lead to higher prices or other changes which would be unwelcome to shoppers, such as longer checkout queues."
4) If the merger was not blocked, do you think that consumers in the UK can benefit from the merger? Yes? No? Justify your answer.
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