Sainsbury’s-Asda merger blocked for 10 years

The Competition and Markets Authority (CMA) said Sainsbury’s has been barred from acquiring a stake in Asda or any of its subsidiaries for the next decade.

It is also prohibited from buying an interest in any business that has a holding interest in Asda.

The same rules will apply to Asda and its parent company Walmart, preventing them from acquiring a stake in Sainsbury’s or any company holding an interest in its big-four rival.

The stipulations will apply until July 9, 2029, unless the parties receive the “prior written consent of the CMA”.

The CMA’s hard-line stance comes less than three months after it blocked the proposed £13bn mega-merger between the UK’s second- and third-largest grocers.

The watchdog said the combination could lead to a “substantial lessening of competition” and that the deal was “more likely to lead to price rises than price cuts”.

Sainsbury’s and Asda insisted they would plough £1bn into price reductions within the first three years of the merger if it went through.

The grocers also offered to sell up to 150 supermarkets in order to help convince the CMA of the merits of the deal.

But the CMA ultimately put the kibosh on a deal that was originally struck in April 2018.

Sainsbury’s boss Mike Coupe accused the watchdog of “taking £1bn out of customers’ pockets”, while Asda and Walmart said they were “disappointed” with the verdict.

Walmart’s international boss Judith McKenna has since revealed that it is mulling an IPO for Asda.

Sainsbury’s, meanwhile, is focusing on its existing strategy. It will invest in revamping 400 supermarkets by the end of this year and is also relaunching its entry-level ranges in a bid to better compete with the likes of Aldi, Lidl and Tesco’s Exclusively at Tesco lines.