Sainsbury’s and Asda promise to cut prices by 10% and criticise competition watchdog’s investigation into merger

Published by Stephen Little on 19 March 2019.
Last updated on 19 March 2019

Sainsbury's and Asda

Sainsbury’s and Asda say they will cut prices by '£1 billion a year' if the proposed merger between the supermarket giants goes ahead.

In a statement today, Sainsbury's and Asda say they strongly disagree with the Competition and Market Authority’s provisional report into the £12 billion merger.

It says that the CMA's analysis of the merger contains “significant” economic and legal errors.

“This is compounded by the CMA's choice of a threshold for identifying competition problems that does not fit the facts and evidence in the case and that is set at an unprecedentedly low level, therefore generating an unreasonably high number of areas of concern,” the statement says.

The supermarkets say that if the deal goes ahead they will deliver £1 billion of lower prices annually to customers, with reductions of around 10% on everyday items.

Sainsbury's has also pledged to cap its fuel profit margins by no more than 3.5 pence per litre for five years, while Asda will guarantee its existing fuel pricing strategy.

Sainsbury's chief executive Mike Coupe and Asda chief executive Roger Burnley issued a joint comment: "We are committing to reducing prices by £1 billion per year by the third year which would reduce prices by around 10% on everyday items. We are happy to be held to account for delivering on this commitment and to have our performance independently reviewed and to publish this annually.

"We hope that the CMA will properly take account of the evidence we have presented and correct its errors. We have proposed a reasonable yet conservative remedy package and hope the CMA considers this so that we can deliver the cost savings for customers."

The merger of Sainsbury’s and Walmart-owned Asda would create a supermarket giant bigger than Tesco.

However, there are concerns that the merger between Britain’s second and third largest supermarket groups could lead to the emergence of a duopoly, resulting in higher costs for suppliers and reducing competition.

The deal was referred for an in-depth investigation by the CMA in September.

In a provisional verdict last month, the CMA hinted that it could block the merger between market giants over grounds it could raise prices and reduce customer choice.

Sainsbury’s and Asda both say they will move to pay small suppliers within 14 days to reduce concerns small businesses could be hurt by the deal.

The CMA is expected to publish its final report by 30 April.

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Well if they sign an

Well if they sign an agreement to say their goods will be 10% cheaper than Tesco or their stres will be closed down, then let them go ahead.