Sainsbury’s and Asda have outlined plans to the Competition and Markets Authority to divest some supermarkets which they hope will satisfy competition concerns.
Both supermarket heads, Mike Coupe and Roger Burnley, have been hugely critical of the CMA's inquiry, claiming today it contained “significant errors”, but seem to have acquiesced to their concerns with the divestment proposal.
A joint statement from both supermarkets read: “Sainsbury's and Asda have also responded to the Notice of Proposed Remedies by outlining supermarket and petrol forecourt divestments across both brands that would satisfy reasonable concerns regarding any substantial lessening of competition as a result of the merger by applying a conservative yet reasonable threshold.”
In February, the CMA threw a spanner in the works of the proposed “mega-merger” between two of Britain’s biggest supermarkets, after they stated the deal would create a “substantial lessening of competition at both a national and local level,” with potentially “a poorer overall shopping experience” for consumers.
Mike Coupe initially slammed their inquiry as “absurd”, and he doubled down on his commitment to reduce prices by 10 per cent today, in a statement co-signed by Asda chief Roger Burnley.
'We are trying to bring our businesses together so that we can help millions of customers make significant savings on their shopping and their fuel costs, two of their biggest regular outgoings,” the duo said.
'We are committing to reducing prices by £1 billion per year by the third year which would reduce prices by around 10 per cent on everyday items. We are happy to be held to account for delivering on this commitment and to have our performance independently reviewed and to publish this annually.
'We hope that the CMA will properly take account of the evidence we have presented and correct its errors. We have proposed a reasonable yet conservative remedy package and hope the CMA considers this so that we can deliver the cost savings for customers.'
Sainsbury’s posted their working out for the savings from three sources: by securing lower prices from suppliers, by putting Argos stores in Asda, and by jointly buying shared goods and services, reducing central costs.
The duo also said they would be investing a £1billion in the first three years of the merger, “as the cost savings flow through”.
In the Sainsbury’s statement, the supermarket also accused the CMA of “identifying competition problems that does not fit the facts and evidence in the case,” which set an “unprecedentedly low level”, generating an “unreasonably high number of areas of concern”.
Alongside the 10 per cent savings, Sainsbury’s also made further post-merger commitments, promising to pay small suppliers within 14 days.
