Merger off

Unite welcomed the decision by the Competition and Markets Authority (CMA) which today (April 25) brings an end to the proposed merger between Sainsbury’s and Asda.

The CMA said it had blocked the merger because it was concerned that the tie-up would lead to higher prices for consumers both at supermarkets and their petrol stations, while also likely creating longer queues.

The scrapping of the proposed merger puts an end to what would have been the creation of the largest UK supermarket chain – £1 out of every £3 spent on groceries in the UK is spent at either Sainsbury’s or Asda.

The competition watchdog earlier this year expressed doubts about Sainsbury’s and Asda’s pledge that the merger would enable them to cut costs that would be handed down to consumers as price cuts.

When the CMA expressed its concerns, the two supermarket chains said that it would guarantee ÂŁ1bn in consumer cost savings through an independent guarantor.

But chair of the CMA’s inquiry group Stuart McIntosh told the BBC that he was doubtful of the price cut guarantees.

“Those promises were based on cost savings which we don’t think are likely to be realised,” he said. “Also those price promises are very likely to be difficult to track in practice.”

These doubts were echoed by Warwick Business School professor John Colley, who told the Guardian in February that it was highly doubtful that consumers would benefit.

“Major savings through the merger in terms of reduced overheads, buying prices, and store closures will not be passed onto consumers,” he warned. “It seems the only major beneficiaries of this merger would be the Asda-Sainsbury’s shareholders.”

Sainbury’s boss Mike Coupe, came under fire last year for being caught on camera singing the Broadway tune ‘We’re in the money’ before an ITV interview about the merger.

Unite, which has 12,000 members between Sainsbury’s and Asda, has long been critical of the merger, especially over what it would mean for workers, who would likely face store closures and job losses.

Unite has also spoken out against the failure of the CMA to consider the effects the merger would have on the workforce, especially at a time of severe concern about food security and rising prices due to Brexit uncertainty.

Commenting, Unite national officer Bev Clarkson said, “Sainsbury’s workers will welcome news that the proposed merger with Asda is off.

“The merger and the possibility of store closures and job losses as a result has been unsettling, causing great uncertainty at a time when the supermarket has imposed changes to contracts that have left many workers out of pocket,” she added.

“Staff will now look to senior management to give them certainty so they can concentrate on serving customers.”