Proposed £12 billion Asda-Sainsbury’s merger faces further review

Britain’s competition watchdog has launched the second stage of its investigation into the proposed £12bn merger between Sainsbury’s and Asda (PA) Credit: PA Wire/PA Images

The proposed £12 billion merger of Sainsbury’s and Asda "raises sufficient concerns to be referred for a more in-depth review", Britain’s competition watchdog has said.

The deal will now be subject to a so-called Phase Two in-depth probe to assess how it could affect competition for UK shoppers, the Competition and Markets Authority (CMA) confirmed.

The investigation will consider whether the tie-up could lead to less choice, higher prices or worse quality services.

“The companies are two of the largest grocery retailers in the UK and their stores overlap in hundreds of local areas, where shoppers could face higher prices or a worse quality of service,” the CMA said.

The CMA said its in-depth probe will also look at other issues raised so far, including those relating to fuel, general merchandise such as clothing, and whether the merged company could use its increased buying power to squeeze suppliers.

The CMA added it will send out an issues statement detailing the issues for review in the “coming weeks”.