Sainsbury's boss Coupe 'confident' on Argos deal despite CMA probe

The supermarket giant has agreed to pay £1.4bn to purchase Argos owner Home Retail Group after out-bidding South African retail conglomerate Steinhoff in a fiercely contested takeover tussle.

But as reported last month, the Competition and Markets Authority (CMA) revealed it will look at whether the deal will create a “substantial lessening of competition” in the market.

The CMA is inviting comments on the deal until June 13 and expects to make a decision by July 25 as part of its “phase 1” inquiry.

If it identifies any problems, the deal could be referred to a phase 2 investigation, potentially scuppering the acquisition.

But, speaking after Sainsbury’s unveiled a 0.8% dip in first-quarter like-for-like sales, Coupe said: “This is very much part of the process.

“There are two things that need to happen, broadly speaking, to allow us to complete the deal. The first is their shareholder vote, which will happen in due course, but submissions have been made to the competition authorities.

“We said before that we see no reason why it shouldn’t go through a phase 1, which is effectively within 40 working days of the submissions being made.

“Clearly it’s up to the competition authorities to opine on that particular issue, but we are as confident as we can be that we’ll get through a phase 1 review.”

Asda fightback

Sainsbury’s wants to acquire Argos to grow its non-food business and compete with the likes of Amazon and John Lewis, while also harnessing the retailer’s delivery capabilities as it accelerates its strategy to be there for customers “whenever and wherever they wish to shop”.

Coupe said that plan has left Sainsbury’s “well positioned” in the market and shrugged off the impact of a potential Asda fightback.

It comes after Dave Cheesewright, international boss at the grocer’s parent company Walmart, told Retail Week that he was “very disappointed” in Asda’s performance and said it would now “shift the balance from protecting profit to protecting share”.

“Whatever they do, we think we are well positioned to deal with”

Mike Coupe, Sainsbury’s

Sainsbury’s maintained its position as the second biggest grocer in the UK, 0.4% ahead of Asda, according to the latest Kantar Worldpanel data, and Coupe believes it will continue to hold its ground despite fighting talk from Asda’s US owners.

“We operate in a fiercely competitive market – that has been the case ever since I have been in the industry,” Coupe said.

“There are many, many public pronouncements about how we are going to move ourselves forward and about being more competitive, so we will deal with whatever comes our way as and when it comes our way.

“We are clear about what we are trying to do – we differentiate ourselves on quality, on service, on availability, we’ll invest in the channels for growth like non-food, convenience and online, and we’ll make sure we are price-competitive.

“Our prices have never been sharper and we believe the price gap between the big four grocers has never been narrower.

“So whatever they do, we think we are well positioned to deal with.”