Responding to the announcement by the CMA today that they will block the proposed merger of Sainsbury’s and Asda, NFU Director General Terry Jones said:
“The NFU’s key concern about the proposed merger has always been the potential impact it could have on our members, with the possibility for abusive market power, as well as the impact on consumer choice and the quality of products coming to the market.
“It is clear from the CMA’s findings that they recognise the impact further consolidation could have on the supply chain, and ultimately shoppers.
“In light of this decision, we will be seeking a meeting with both Sainsbury’s and Asda to fully understand what this decision will mean moving forward.”
In April 2018 Sainsbury's confirmed plans to merge with Asda, which is currently owned by US supermarket giant Walmart.
The NFU welcomed the recognition from the CMA to explore the impacts this proposed merger may have on the supply chain.
In summary, the NFU submission demonstrated that the proposed new entity may further consolidate the grocery supply chain in order to find cost and efficiency gains as a means to deliver the price savings for consumers.
The NFU raised the following areas of concern:
- The potential further consolidation of the grocery supply chain may impact availability and choice of product to consumers.
- The risk of abusive market power by the proposed new entity which could make unreasonable demands on suppliers and transfer excessive risks and unexpected costs on to primary producers. This in turn damages their ability to innovate and invest.
- The effect on competition will outweigh any consumer benefit derived through lower prices.
More from NFUonline: