Asda-Sainsbury’s merger decision delayed until April

A decision on the proposed merger between UK grocery giants Sainsbury’s and Asda may not be announced before the end of April, following an extension for the Competition & Market’s Authority (CMA) to make their decision.

A decision on the £7.3 billion grocery merger was expected in early March, but may be delayed for nearly two months, following a recently published ruling by the Competition Appeal Tribunal, according to trade publication Retail Gazette.

The revised timetable gives the regulator extra time to decide what, if any, steps need to be taken to satisfy the CMA that shoppers won’t face higher prices or a lower quality of service as a result of the merger. It comes after the two supermarkets sought a Judicial Review from the Competition Appeals Tribunal (CAT) last month to buy more time to respond to the CMA’s inquiries into the proposed merger after the regulator refused their original request, citing the “unprecedented size and complexity” of the case. Although the retailers were granted some extra time by the tribunal, it fell short of their request.

According to a report in The Guardian last August, the retailers may be forced to offload more than 460 stores where the catchments overlap – accounting for around 40% of the combined estate – although it pointed out that the Tesco-Booker and Poundland-99p Store mergers were signed off without calling for such drastic sales. 

Following Sainsbury’s poor Christmas results, which saw like-for-like sales fall 1.1%, over the third quarter, retail analyst Clive Black of Shore Capital described the supermarket’s proposed merger with Walmart-owned Asda as “more critical than ever to Sainsbury’s medium-term prospects”.

Shortly after the deal was announced, KantarWorldpanel analyst Fraser McKevitt said the tie-in would transform the UK’s grocery market’s landscape and create a combined group worth around £13.2 billion.