Blog: Andy CoynePlenty of hot air as UK politicians grill Asda, Sainsbury's over merger

Andy Coyne | 22 June 2018

UK Parliamentary select committees at their best are meant to bring light rather than generate heat but this wasn't a select committee at its best.

The House of Commons environment, food and rural affairs select committee, or to be more accurate its chairman Neil Parish MP, was in no mood to listen to the Asda and Sainsbury's CEOs' measured responses about why their retailers planned to merge and what it would mean for suppliers.

Time and again Asda boss Roger Burnley and his Sainsbury's counterpart Mike Coupe were interrupted to be told they were talking “baloney” or telling “Mickey Mouse” tales about how much they knew about each other's businesses or accused of, at best, obfuscation for not admitting smaller suppliers would be the ones to pay for a promised 10% cut in prices on popular lines after the deal (should the transaction get past competition officials).

When they were allowed to get in a word edgeways, there was quite a lot of interesting stuff coming out from messrs Burnley and Coupe.

Coupe admitted scale was a big part of his thinking. “Amazon is 100 times the size of Sainsbury's in terms of market capitalisation. That's a company Sainsbury's will have to compete with in the future,” he said.

“We have to become more competitive. Lidl and Aldi are huge global competitors who sell a more restricted range of products.”

And Burnley admitted there would be an impact on the deals the companies had with larger manufacturers where those suppliers had a different price arrangement with one retailer or the other.

“We haven't shied away from the fact that the majority of the synergies do come from aligning the two buying prices one of us is benefiting from but it is not creating a new low price,” he said.

“Where is the fairness in each of us paying a higher price for some brands?”

While not suggesting the deal is one that has altruism rather than competitive market realism at its heart, it's a shame that such responses and other details that came out of the session with MPs were lost in the fog of war waged by the committee's chairman.

If such committees approach such sessions with a view to soundbites and the next day's headlines rather than getting to the bottom of genuinely important issues by questioning the key people involved then their worth may be questioned.


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