The Competition & Markets Authority has revealed the strength of opposition from rival retailers and supplier bodies to the proposed merger between Asda and Sainsbury’s.

Here The Grocer summarises the responses to its investigation, published by the watchdog yesterday.


Aldi urges the CMA to cast aside the rise of the discounters when it comes to deciding the fate of the merger, arguing they are not operating in the same league as the big four.

Repeatedly warning of the threat of a duopoly posed by Tesco, alongside Sainsbury’s-Asda, it says the merger would lead to reduced competition and choice for consumers.

“The merger would combine the UK’s second and third-largest grocery retailers, to create a duopoly with Tesco that would control almost 60% of the market,” says Aldi UK CEO Giles Hurley.

“Aldi’s market share has been achieved through a distinct and fundamentally different offering than that of the ‘big four’ supermarkets.” He compares Aldi’s limited range of 1,800 products with the 30,000-40,00 products in a typical supermarket, as well as the vast difference in size of the properties.

The discounter also warns the merger would have a damaging impact on consumer choice.

“The proposed merger will increase the pressure on suppliers to reduce their margins further, with local suppliers likely to feel this pressure most acutely,” says Hurley.

This pressure for lower supplier costs will create a ‘waterbed effect’, forcing suppliers to increase prices for other purchasers to secure sustainable margins, he adds.

“Raising the purchasing cost for other retailers may then lead to higher costs for consumers in these other stores.

“In addition, the increased purchasing power of the merged entity may also lead to pressure for exclusivity deals, prohibiting retailers from accessing key suppliers and limiting the range and choice available to consumers.”

Read more: Aldi urges CMA to put a stop to Sainsbury’s-Asda merger


Morrisons warns the CMA the merger would increase the prospect of co-ordination on prices between the most powerful supermarkets in the UK.

It points to the 2004 Competition Commission invesitgation into its takeover of Safeway, which concluded that “at the national level, we found that the change in market dynamics brought about by the acquisition of Safeway by any of Asda, Sainsbury’s or Tesco might be expected, given the conditions facilitating co-ordinated behaviour, over time to lead to such co-ordinated behaviour”.

Morrisons says the spectre of such an anti-competitive position arises again with the proposed merger.

It adds: “Until recently, Asda offered a price guarantee whereby it would refund the difference if prices were not at least 10% cheaper than for the equivalent shop against Tesco, Morrisons and Sainsbury’s (this scheme has now been withdrawn). The other grocery retailers, including Sainsbury’s, Morrisons and Tesco, have also operated similar schemes in the past. The retailers are also able to use a combination of price tracking and Kantar market switching data to check the prices offered by competitors, and if they are losing customers, they are able to see to whom.”

Morrisons also claims the impact of the discounters on the dominance of the big supermarkets had been “overstated”.

“The market structure at a national level has remained similar since 2008 with four large retailers that have actually increased market share,” it said.

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Claiming the deal would lead to a “fundamental shift in the dynamics of retail competition at the national level” Waitrose says the merger could force smaller retailers out of business because of their inability to compete on price cuts and promotions.

It says the move could increase the likelihood of further consolidation in the market and allow a merged Sainsbury’s-Asda and Tesco to in effect set prices.

“Tesco is very much the market leader on price. The consolidation in the market resulting from the merger would only further reinforce this dynamic, increasing the likelihood of co-ordination, particularly between the two largest entities, and thereby further limiting the opportunity for competition on price (as well as in other proposition levers). Ultimately this would make for a more homogenous market and less variety in terms of the customer offer available to shoppers.”

Waitrose also warns of a disastrous impact on suppliers, which it said could be forced out of business by the merger.

“There is also the possibility that, with their combined market share, the two main players might place so much pressure on suppliers to reduce COGS that product quality might suffer or some smaller suppliers might go out of business, thereby adversely impacting the breadth and quality of product ranges on offer to customers.”


The consumer body says the CMA should demand concrete evidence that the merger’s projected £500m cost efficiencies would be passed on to consumers in price cuts.

“It isn’t clear what proportion of those efficiencies the companies are suggesting would be passed on to consumers as opposed to their shareholders,” it says. “We fully agree with the CMA that consideration of any merger-specific efficiencies must focus on the “likelihood of these savings being passed onto consumers” in the short and long term.

“The CMA needs to make sure it has accurate and impartial evidence to look at this. We would argue that given the importance of this sector for consumers, unless the CMA has sufficient certainty that those efficiencies would deliver positive outcomes for consumers, they should not be taken into consideration as a countervailing factor likely to prevent or mitigate substantial lessening of competition.”

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Food & Drink Federation

The FDF accuses Asda and Sainsbury’s of presiding over a “climate of fear” among suppliers, who it says are too scared to speak out directly about the potential impact of the merger.

The body reveals it is conducting a questionnaire with all FDF members and plans to share it with 70 partner trade associations, in a bid to get suppliers to come forward with their concerns.

“Sainsbury’s and Asda act as gatekeepers to the market,” it says. “As a result, suppliers are reluctant to share information that could risk identifying themselves as they cannot afford to be delisted, regardless of legal protections offered.

“Multinationals and small businesses alike have told us that they would not respond directly to the CMA in the same way they would not provide direct feedback to the Groceries Code Adjudicator where buyers contravene the rules set out in the Groceries Supply Code of Practice.”

British Brands Group

The BBG warns of the threat of the massive buying power of a merged Sainsbury’s-Asda, especially to branded suppliers. 

Director John Noble says this would result in a wider adverse knock-on impact for consumers “as squeezed margins put downwards pressure on quality and innovation”.

“Furthermore, a near duopoly increases the buyer power of Tesco, as it will become a crucial listing for those new products that may not fit with the merged entity’s product strategy,” he says.

“Were it to be known that the merged entity had delisted a product, Tesco would be aware that it would be a more crucial route to market for that supplier.”

The BBG says the supermarkets’ share or the procurement market for suppliers was “markedly higher” than its share of grocery sales because of the smaller presence of brands at Aldi, Lidl and M&S, arguing this should be a “crucial consideration” for the CMA.

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The Consumer Council

The council warns that shoppers in Northern Ireland could be forced to shop at the biggest, most expensive supermarkets as smaller players are driven out of the market by the merger.

It points to research by Retail NI chief executive Glyn Roberts, which claims if the merger goes ahead, £1 in every £3 will be spent at the new giant.

“The merger may result in monopolistic behaviour and significant changes to Northern Ireland’s supermarket industry. The Consumer Council echoes Retail NI’s worries about the impact this would have on squeezing many smaller suppliers and the new business’s higher buying power. This increase in buyer power could potentially distort competition through tactics such as collusion, predatory pricing and general other market shifts.

“Another way in which the merger could distort competition in Northern Ireland’s groceries market over time is through barriers to entry, which may mean that consumers in Northern Ireland will be forced to shop at larger, more expensive supermarkets that have not been driven out of the market. This could potentially change the way in which customers in Northern Ireland shop.”


The petrol/hospitality company claims the merger will reduce the incentive for competition in the petrol filling station sector. 

“We believe that the parties are even closer competitors in the PFS market than they are in the market for the supply of groceries. This is because fuel is a homogeneous product. There is no branding of the fuel and we believe it likely that consumers would be happy to fill up with petrol or diesel at any PFS, whereas some consumers may have a preference for one.

It says the creation of a new national leading fuel supplier would “alter their ability and incentive to price fuel and the grocery/fuel proposition they offer to customers”.