Sainsbury’s sources have admitted it is hard to see a way through for the merger with Sainsbury’s unless it can persuade the CMA to “fundamentally rethink” its position on the deal.
After the hammer blow of today’s provisional findings report boss Mike Coupe accused the CMA of “moving the goalposts” on the deal and disputed the methodology used to claim it would lead to higher prices nationally.
However, despite accusing the CMA of “fundamentally misunderstanding” consumer shopping behaviour, a source admitted that it would be very difficult to overturn the decision
“If this were a final report then it would effectively be a block,” said the source.
“Unless the CMA fundamentally changes its thinking it’s going to be very difficult for this deal to conclude.”
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The source said the findings of the CMA’s so-called gross upward pricing pressure index (GUPPI), used as a key measure on the potential impact of higher prices, were “statistically insignificant according to our lawyers”.
Sainsbury’s and Asda were also left fuming after the CMA, despite including Aldi and Lidl in its Phase 2 inquiry, increased the estimated number of local areas where it warned the deal would case competition issues.
The Phase 1 report suggested 463 areas would be at risk, but today’s report upped that figure to a huge 629.
“That just doesn’t add up,” said the source.
Today Coupe accusing the CMA of “fundamentally moving the goalposts - but not only that, changing the shape of the ball and choosing a completely different shaped field”.
Coupe said the precedent set by the decision was a “massive problem for any business that might be considering a transaction in the UK.
“In the end, customers are the main losers,” he told the BBC Today programme. “We believe we would be able to lower prices for customers in the UK. We made that case to the CMA and the CMA has completely dismissed our evidence.
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“We will clearly make very strong representations as to the inaccuracy and lack of objectivity in their analysis.
“Ultimately we have until the 30 April. We will fight right the way through the process.”
Coupe added the decision would have lasting consequences for business confidence in the UK.
“A UK plc with Brexit looming, and a completely unpredictable set of competition rules, who would invest in this country?”
However, he said he always knew there were competition risks involved in the tie-up with Asda.
“I would be first to acknowledge there was always a degree of risk involved,” he said.
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