A new petition is calling on the UK competition watchdog to block the “damaging” proposed merger of supermarkets Asda and Sainsbury’s.
The retail groups first confirmed plans to merge in April of last year. The deal, should it go ahead, would give the companies a bigger market share than Tesco and create one of the UK’s leading grocery, general merchandise and clothing retail chains, with combined revenues of GBP51bn (US$70.1bn) in 2017.
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With more than 8m customers regularly buying its Tu clothing, Sainsbury’s is the sixth largest clothing retailer by volume in the UK. It hails a “strong” position in both the womenswear and childrenswear markets and says there are opportunities for future growth in menswear, which now accounts for 15% of clothing sales and is the retailer’s fastest growing clothing category.
If coupled with Asda’s successful George clothing line, the combined business could stand as a competitor to the likes of UK value clothing retailers such as Primark.
The merger, however, needs to be approved by the competition regulator which, last month, said the early findings of its in-depth investigation raised extensive competition concerns over the potential tie-up.
In a statement on 20 February, the Competition and Markets Authority (CMA) said it has provisional concerns that the merger could lead to a substantial lessening of competition at both a national and local level. The combined impact means that people could lose out right across the UK and that the deal could also cost shoppers through reduced competition in particular areas where Sainsbury’s and Asda stores overlap, it added.
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By GlobalDataIn response, GMB Union has moved to oppose the deal with more than 3,500 workers and shoppers having signed its petition urging the CMA to ‘protect our communities and people’s livelihoods and block the merger’.
The group formally responded to the CMA’s provisional remedies for the merger yesterday (6 March) ahead of today’s deadline.
“We’ve written to the CMA to let them know that that we – and thousands of other people – don’t think this merger can now go ahead,” said GMB national officer Gary Carter.
“GMB was not opposed to the merger – but based on the CMA’s own evidence, we now have to take a position. It will be incredibly damaging, and the only rational response is to stop it from going ahead. What Asda workers need is certainty and job security.
“The price shoppers and workers face paying for this merger is simply too high.”
A fundamental misunderstanding
Meanwhile, Sainsbury’s and Asda reiterated their joint statement, with a spokesperson for both supermarkets saying the CMA findings “fundamentally misunderstand how people shop in the UK today and the intensity of competition in the grocery market”.
“The CMA has moved the goalposts and its analysis is inconsistent with comparable cases,” the supermarkets claim. “Combining Sainsbury’s and Asda would create significant cost savings, which would allow us to lower prices. Despite the savings being independently reviewed by two separate industry specialists, the CMA has chosen to discount them as benefits.
“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.”
