The planned relationship between Sainsbury's and Asda's supermarkets has suffered the final blow from the British anti-competitive agency, which said this morning that it "has decided to ban the merger in its entirety."
Read more: Watchdog may block the merger of Sainsbury's Asda
Sainsbury's, Walmart and Asda have revealed today that they have mutually agreed to terminate the merger plans.
The Competition and Markets Authority warned that the expectation that the £ 12 billion cost, which would create Britain's largest retailer by market share, would "be expected to lead to significant reductions in competition (SLC) in a number of markets in the UK ".
"We found serious competition concerns that could be expected to lead to price increases or deterioration in quality, scope or service for customers nationwide or in a separate store," CMA added.
The final conviction today is two months after CMA initially casts doubt on the proposed link.
In February, the observer warned in its preliminary findings that the link could lead to "significant reductions in competition at both national and local levels".
Sainsbury's stock price has fallen nearly nearly 20 cents in the past three months.
In response to CMA's final conviction today, Sainsbury's Chief Executive Mike Coupe accused CMA of "effectively taking 1 billion pounds out of customers' pockets."
He said: "The specific reason for the desire to merge is lower prices for customers." The CMA's conclusion that we will increase post-merger prices ignores the dynamic and highly competitive nature of the UK grocery market from the pockets of customers.
"Sainsbury's a great business, and I'm confident in my strategy, we're focused on delivering high quality, value and service to our customers and making shopping with us as comfortable as possible."
Asda's chief Roger Burnley added: "We are disappointed with their discoveries, but we will continue to find ways to bring money back into our customers' pockets and deliver high quality and service to the ever-changing and demanding marketplace. year has been an alarming time for all our colleagues and I am extremely grateful for their commitment and dedication during this time, and now our focus is on the most important work that we all have – delivering to our customers.
Why is it interesting? Town of A.M. view
Almost a year after the day Sainsbury revealed for the first time that he was in talks to merge with Asda, everything is falling apart.
At the end of April 2018, the two retail giants lost market share to German distributors Aldi and Lidl, and the threat of Amazon entering the food sector is very real. But 12 months later, their plans to combat industrial merger pressure have been torn apart, leaving both companies with the same problems they face a year ago.
The immediate consequences of today's decision can be bloody. A number of City analysts say they are struggling to see Sainsbury's boss Mike Coupe remain CEO after promising investors to save 500 million pounds of the project (which he heads). Submitting the results next week can give some insight into the next steps of the company.
As for Aldie, it is the owner of mother Walmart who wants to sell with a few potential private capital proposals on the horizon.
Still, as this decision could be about the future of the British supermarket industry, perhaps the most interesting moment to come out of today's news is not because of Sennery or Asda, but the watchdogs have surpassed their hopes.
The tough words of the Competition and Markets Authority (CMA) may be a sign of what will come under the leadership of Andrew Tyrie, who took over in the summer after winning the reputation of a chairman of the Treasury commission for his fierce interrogation. service directors.
The merger was one of Tyre's first major tests as a CMA boss, and his shrinking muscles raised the attention of the city. Also, CMA's recent recommendation to seriously shake the UK accounting market.
Sources say CMA's approach to the relationship has always felt "healthy," despite a number of attempts by Sainsbury and Asda to help seal the deal.
For large corporations that watch a merger, Tyrie's convincing hit at Sainsbury & Asda is worth considering.