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THE COMPETITION watchdog launched a formal investigation yesterday into the proposed £12 billion merger between Sainsbury’s and Asda.
The deal, which would create Britain’s biggest retail chain, will now be subject to a phase one probe to assess how it could affect competition for UK shoppers, the Competition and Markets Authority (CMA) confirmed.
The investigation will consider whether the tie-up could lead to reduced choice, higher prices or poorer services.
It will also look at whether the merged company could use its increased buying power to “squeeze suppliers” and whether this could have potential knock-on effects for shoppers.
CMA chief executive Andrea Coscelli said: “About £190bn is spent each year on food and groceries in the UK, so it’s vital to find out if the millions of people who shop in supermarkets could lose out as a result of this deal.
“We will carry out a thorough investigation to find out if this merger could lead to higher prices or a worse quality of service for shoppers and will not allow it to go ahead unless any concerns we find are fully dealt with.”
It is also expected that scores of stores will have to be offloaded to allay any potential competition concerns.
Sainsbury’s and Asda have asked the CMA to move to the in-depth phase two part of the inquiry through a fast-track process. The CMA said it expects to accept the request unless it receives any valid objections.