UK competition regulator refers Sainsbury Asda merger for phase 2 investigation

The Competition and Markets Authority (CMA) in the United Kingdom confirmed Wednesday that the proposed merger between J Sainsbury plc and Asda Group Ltd. is being referred for an in-depth Phase 2 investigation.

CMA noted that the deal raises sufficient concerns through its Phase 1 investigation for it to be referred for a more in-depth review.

In August, the CMA had opened its initial Phase 1 investigation into the merger and announced the companies had requested a 'fast-track' referral to Phase 2.

The companies are two of the largest grocery retailers in the UK and their stores overlap in hundreds of local areas, where shoppers could face higher prices or a worse quality of service.

These concerns will be considered further in the Phase 2 investigation, along with other issues raised so far with the CMA - including those relating to fuel, general merchandise (such as clothing) and increased 'buyer power' over suppliers.

The Phase 2 investigation would be conducted through multiple customer surveys and engagement with other retailers, suppliers and industry bodies - to inform its detailed analysis.

On April 30, Walmart agreed to sell its U.K. business, Asda, to Sainsbury in a deal worth 7.30 billion pounds. (dpa)