Experts say the decision to block the Asda/Sainsbury's merger is "good news for customers"

Experts have generally welcomed the CMA's decision to block the 12bn merger
Experts have generally welcomed the CMA's decision to block the 12bn merger
Have your say

Consumer watchdog Which? has backed the CMA's decision to block Asda's £12bn merger with Sainsbury's.

Caroline Normand, Which? ​d​irector of ​a​dvocacy, said:​ ​“The CMA is right to block this merger, which could have reduced competition in the sector resulting in a number of problems for shoppers including increased prices, reduced quality and choice, and a poorer shopping experience.

“Sainsbury’s and Asda have fallen behind the pack recently in this trusted sector – with both finishing in the bottom four of our annual supermarket survey as rivals like Aldi and Lidl have done a better job of giving shoppers what they want.”

​A​nalyst​ Bruno Monteyne at Bernstein said Asda can now focus on trading.

​"​For Asda, it is back to business as usual​," he said.​

​"​Their turnaround strategy has started to work and they are trading closely in line with Tesco​, ​​leading the big​ four​ supermarkets.

​"​Contrary to what some commentators think, we do not think that Walmart is in rush to dispose of Asda.

​"​Asda was never considered a problem business (it generated profits, cash and talented execs for years), but the S​ainsbury's​ merger seemed a unique opportunity. They will go back to good retailing.​"​

​Warwick Business School​ said the CMA has blocked the merger in order​ to "protect the millions of people who shop at Sainsbury's and Asda every week" from increased prices.

Professor John Colley​ at​ Warwick Business School, said: “This is good news for customers. Sainsbury’s CEO Mike Coupe may have promised he would pass on £1bn of savings to customers over three years, but that figure was never verifiable nor credible.

“Prices move up and down all the time. Over three years it would have been impossible to assess what prices would have been without the merger.

“Allowing two chains - Tesco and Asda-Sainsbury’s – to share almost 60 per cent of the market would have resulted in less choice and competition, creating the risk of higher prices.​"

Prog Colley said​ the major beneficiaries of this merger would have been the Asda-Sainsbury’s shareholders.

“Mr Coupe will now be under some pressure from those shareholders as the abortive bid will have been very expensive in adviser fees and an immense distraction for senior management.

“Sainsbury’s desperately needed this merger as they are continuing to lose market share. They are simply too expensive for their range and service.

“Mr Coupe will need to identify and publicise his Plan B soon to pacify disaffection.”

Catherine Shuttleworth, CEO at Leeds-based Savvy, said the CMA has outright rejected the Sainsbury's/Asda deal on the basis that it believes that prices would increase for customers in both food and fuel.

"They say that they have looked at the changed dynamic of the marketplace which makes it all the more surprising that they really think prices would go up," said Ms Shuttleworth.

"The comments from Stuart McIntosh of the CMA this morning - that it would be difficult to track prices post the proposed merger - is completely unbelievable. It has never been easier to track supermarket prices.

"The more we hear from the CMA the more we should be concerned that they are not working in the best interests of consumers and clearly do not understand the market dynamics of the UK grocery sector.

"So back to the drawing board for both parties - with neither side sounding happy at the outcome. Let’s now see what the law of unintended consequences could bring to the grocery market.”