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Asda-Sainsbury’s merger: Committees pen letter fearing ‘dominance’

The Environment, Food and Rural Affairs (EFRA) and Department for Business, Energy and Industrial Strategy (BEIS) Committees have written a joint letter to the Competition and Markets Authority (CMA) regarding the proposed Asda and Sainsbury’s merger.

The letter from Rachel Reeves, chair of the BEIS committee and Neil Parish, chair of the EFRA committee to David Currie, chair of the CMA raises concerns over the impact that the merger will have on the grocery supply chain, particularly regarding the market dominance that this would create for the new Asda and Sainsbury’s business and Tesco.

The CMA has said that the merger is subject to review and the committees asked the body to consider the timing, length and scope of its CMA investigation. It also asked that the investigation would determine whether the merger will create local monopolies or require the stores to divest premises.

Rachel Reeves, chair of the BEIS committee, said: “This merger threatens customer choice, hands yet more power to mighty supermarket players and heaps more pressure on small and medium suppliers. The CMA needs to be a champion of consumers and it must look closely at the impact of this merger on the supply chain as well as the effect on competition in the supermarket sector.”

Neil Parish, chair of the EFRA committee added: “Grocery retailers don’t have a gleaming record of treating suppliers well and the Grocery Code Adjudicator’s 2017 survey found that Asda was the worst grocery retailer in the eyes of its suppliers.

“The cost savings being promised through this merger must not come through squeezing those further down the supply chain. I am also concerned that with two supermarkets taking up around 60% of the market, suppliers would be more reluctant to raise complaints about unfair practices.”

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