Merger between Asda & Sainsbury’s could risk 2,500 jobs

Swansea, UK: May 22, 2016: Shoppers enter and leave a busy Asda store.

The merger between Sainsbury’s (LON: SBRY) and Asda could lead to 2,500 jobs be under risk, according to the New Economics Foundation.

The thinktank warned that the ten percent reduction for consumers will be passed onto suppliers, which will lead to job cuts for 2,500 employees.

“If the proposed merger between Sainsbury’s and Asda is allowed to proceed, we are likely to see a classic case of monopoly-like power in a mark,” said the head of economics at the New Economics Foundation, Alfie Stirling.

“This is part of a broader picture, where time and again UK capitalism shows itself to be geared against small business in a way rarely seen in the rest of Western Europe. Small and medium-sized firms make up more than 99 percent of all UK companies, 60 percent of employment and nearly half of turnover, yet they are repeatedly required to play second fiddle.”

The potential merger between the two supermarket chains has come against criticism from MPs who believe Torquay, Paignton, Lancaster, Brighton and Kirkcaldy will become “monopoly” towns.

Kevin Foster, the local MP for Torquay in Paignton, said: “You only have to look how close the Asda and Sainsbury’s are in Torquay and Paignton. It does raise concerns about how long a unified company would want to operate two stores.

“There is also the impact this has on the ability to choose where to shop. As it stands there are only five major supermarkets in Torquay in Paignton and four of them are owned by what would be a combined company.”

The Competition and Markets Authority (CMA) will carry out a six-month investigation into the proposed deal between Walmart-owned Asda (NYSE: WMT) and Sainsbury’s.