Competition watchdog urged to investigate possible Asda-Sainsbury's merger

Concerns have grown over consumer choice and the possible threat to jobs if the merger were to go ahead
Concerns have grown over consumer choice and the possible threat to jobs if the merger were to go ahead
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The competition watchdog is being urged to investigate the possible merger of Sainsbury's and Asda amid concerns over consumer choice.

The creation of a supermarket giant as part of a £10 billion deal, which could be announced as soon as Monday, has also raised fears over the impact it may have on jobs.

Liberal Democrat leader Sir Vince Cable, the former business secretary said the CMA should investigate the possible merger

Liberal Democrat leader Sir Vince Cable, the former business secretary said the CMA should investigate the possible merger

If Sainsbury's and Asda are to merge, together they would have a bigger share in the grocery market than Tesco.

Liberal Democrat leader Sir Vince Cable, the former business secretary, said the Competition and Markets Authority (CMA) "must investigate" any deal after it emerged the companies were in advanced talks.

Shadow business secretary Rebecca Long-Bailey echoed Sir Vince's calls, warning the merger risks "squeezing what little competition there is in the groceries market even further".

Sir Vince said the CMA should force the companies to sell off stores if the merger meant the new giant was dominant in a particular area, telling the watchdog's new chief, Andrew Tyrie, to "get tough with monopolies".

Shadow business secretary Rebecca Long-Bailey warned of the risks of a possible merger

Shadow business secretary Rebecca Long-Bailey warned of the risks of a possible merger

Ms Bailey warned that, in the absence of proper vetting, it would be "British shoppers that suffer from rising prices and British workers that may be fearing for their jobs".

It is understood that any investigation by the CMA would only be announced once an intention to merge was formally unveiled.

The latest statistics show that Tesco has a 25% grocery market share, while Sainsbury's has 13.8% and Asda has 12.9%. Together, they would move ahead of Tesco, with 26.7% of the grocery market.

The merger would have to be approved by the CMA, because the two entities are the second and third largest grocery retailers in the UK.

Shadow business secretary Rebecca Long-Bailey warned of the risks of a possible merger

Shadow business secretary Rebecca Long-Bailey warned of the risks of a possible merger

Some expect that a deal could be approved after the CMA's decision to allow Tesco to take over Booker, the UK's largest grocery wholesaler in a deal worth £3.7 billion.

News of the potential deal also sparked concern among workers' unions, which demanded urgent meetings with Salisbury's and Asda chiefs.

Tim Roache, GMB general secretary, said: "Our first priority is to safeguard the job of every single Asda member, both in stores and in distribution. We are demanding an urgent meeting with Asda to get the answers and assurances our members need and deserve.

"GMB will be making sure the voices of supermarket workers are not lost amidst all the talk of mergers and acquisitions. We should never forget these companies' empires are built upon the hard work of their employees.

General secretary of the GMB union, Tim Roache said their first priority was to safeguard jobs for staff members

General secretary of the GMB union, Tim Roache said their first priority was to safeguard jobs for staff members

"Rest assured, we will be exploring every available legal avenue to protect our members' jobs."

Joanne McGuinness, Usdaw national officer, said: "Our priorities will be to protect our members and ensure any deal between the retailers does not impact on their jobs or incomes."

Asda is owned by the world's largest supermarket retailer Walmart and it is not yet clear how the deal would be structured.

One option is Sainsbury's absorbing Asda stores, while Walmart take a large stake in the combined group.

In a statement, Sainsbury's said: "J Sainsbury plc [Sainsbury's] notes the speculation concerning a possible combination with Asda Group Limited.

"Sainsbury's confirms that it and Walmart Inc are in advanced discussions regarding a combination of the Sainsbury's and Asda businesses. A further announcement will be made at 7am on Monday 30 April."

It would not be the first time Sainsbury's has acquired another high street giant. In April 2016, they announced a £1.4 billion takeover of Argos, which led to better than expected results the following Christmas.

The traditional high street has come under increasing pressure in recent years, with the growth in online retailers.

Sainsbury's and Asda have also been squeezed by the rise of lower-cost supermarkets Aldi and Lidl, who between them have a 10.5% grocery market share in the UK.