The Competition and Markets Authority will conduct an in-depth investigation into the £15 billion merger between Sainsbury’s (LON: SBRY) and Walmart owned Asda (NYSE: WMT).
The CMA carried out an initial review of the deal but has said the deal “raises sufficient concerns” to be investigated in more depth.
“The companies are two of the largest grocery retailers in the UK and their stores overlap in hundreds of local areas, where shoppers could face higher prices or worse quality of service,” the CMA said.
The merger will create the UK’s biggest retail chain with a 31.4 percent market share and with 2,800 stores. The new business would £1 of every £3 spent on groceries.
In a joint statement, Mike Coupe and Roger Burnley – the chief executive’s of Sainsbury’s and Asda – said: “We expected the CMA would want to undertake an in-depth review and look forward to engaging with the CMA and Panel on this next phase of the process.”
Andrea Coscelli, chief executive of the CMA, said: “About £190 billion 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.”
The CMA announcement comes as Tesco (LON: TSCO) is preparing to unveil its new discount chain, Jack’s.