Sainsbury’s vows to fight on, but ASDA merger looks doomed, says GlobalData

In response to the CMA’s provisional findings on the proposed ASDA/Sainsbury’s merger,

Patrick O’Brien, UK Retail Research Director for GlobalData, a leading data and analytics company, offers his view:

“The CMA’s provisional findings on the proposed merger of ASDA and Sainsbury’s have devastated any prospect of the merger going ahead. Rather than just point to a number of stores that would need to be divested as had been expected, the CMA has raised concerns about the tie-up in just about every conceivable way – on national and local grounds, on store and online competition concerns and on major stores, convenience stores and petrol stations. The CMA even outlined how difficult the required level of divestments needed would be to action.

“It seems that the CMA didn’t buy the central strategy of the deal: that it would benefit consumers by using their combined might to negotiate down major suppliers and pass on much of the benefit to shoppers in reduced prices.

“While Sainsbury’s CEO Mike Coupe vows to fight on, this may be because he cannot concede without losing face. The confidence he placed in getting the deal past the CMA in light of its previous – generous – decision to allow Tesco to buy Booker looks like a bad misjudgement now, and recent results have seen Sainsbury’s fall behind its rivals, inviting the suggestion that management have taken their eye off the ball.”

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