Blog: Dean BestAsda boss reacts to UK watchdog's stance on Sainsbury's deal

Dean Best | 21 February 2019

Yesterday (20 February), Sainsbury's chief Mike Coupe angrily took to the airwaves within minutes of The Competition and Markets Authority announcing its provisional findings on the retailer's proposed merger with Asda. Today, how the latter's boss viewed the watchdog's stance came to light.

Coupe hit out at the CMA's belief the combination of Sainsbury's with Walmart-owned Asda would reduce competition in the UK grocery retail sector. Speaking to the BBC yesterday morning, the Sainsbury's chief executive claimed the CMA had changed the way it had judged the impact of transactions, arguing the watchdog had "fundamentally moved the goalposts and, not only that, they've changed the shape of the ball and chosen a completely different playing field".

Nothing was heard from Asda boss Roger Burnley - a former Sainsbury's executive - until an op-ed appeared in The Sun newspaper this morning. Burnley underlined his - and Coupe's - belief that bringing the two retailers together would lead to lower prices for consumers.

"Asda has a track-record over 50 years in delivering low prices and the rationale behind the merger is anchored in our commitment to putting money back in consumers' pockets," Burnley wrote.

"That is why I am disappointed - and, to be frank, a little offended that the CMA's provisional findings into our proposed merger with Sainsbury's have suggested that Asda would plan a merger that would leave customers worse off. This flies in the face of its previous investigations and misunderstands how UK consumers shop today, enjoying unlimited choice."

Burnley echoed Coupe's comments yesterday when the Sainsbury's boss said he would continue to make the case for the merger as the CMA continues its review of the deal.

The CMA is inviting responses from interested parties into its provisional findings by 13 March and its notice of possible remedies by 6 March.

The Food and Drink Federation, the industry association representing food and soft-drink manufacturers doing business in the UK, has embraced the decision. When Sainsbury's and Asda announced their planned deal last April, industry watchers said suppliers would at least react in a guarded fashion, with some concerned about the possible buying power of the enlarged organisation.

"We are pleased to see that the CMA findings reflect the concerns of FDF members that the proposed merger would cause a substantial lessening of competition at both a national and local level. The CMA has correctly identified a number of issues with the proposed merger and with an ever more consolidated grocery market. The CMA should now proceed to apply the appropriate remedy," a spokesperson for the FDF said.


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