Sainsbury’s and Asda succeed in extending merger timetable

By Rod Addy contact

- Last updated on GMT

Sainsbury's and Asda may have underestimated the enormity of the investigation into their proposed merger
Sainsbury's and Asda may have underestimated the enormity of the investigation into their proposed merger
Sainsbury’s and Asda have won their appeal against the Competition and Markets Authority’s (CMA’s) timeline to respond to submitted evidence on their proposed merger, securing a further 11 days over Christmas to reply.

In a statement issued on 14 December, Sainsbury’s stated: “J Sainsbury plc and Asda Group Limited attended a Competition Appeal Tribunal hearing today concerning the process and timetable of their proposed merger. 

“The court ruled in the parties’ favour and found that the timetable for responding to materials and attending a main party hearing were both unfair.

“The parties took this step reluctantly and look forward to re-engaging with the CMA and panel and working constructively with them going forward.”

‘Big job’

Commenting last week on the retailers’ call for a Competition Appeal Tribunal hearing on the issue, Shore Capital head of research Clive Black said: “The investigation into the proposed Sainsbury’s-Asda merger was always going to be a big job and a challenge within the timetable set out.

“In that respect we wonder if Sainsbury’s-Asda have underestimated the task at hand in what they are required to provide to the CMA …” That also led Shore Capital to “wonder if the legal costs of servicing this process are likely to be much higher too …”

“Given that Sainsbury’s-Asda have more insight into this process than the rest of the grocery industry, such potential underestimation would also be surprising to us.”

Black said challenging the adjudicator in a competition process did not seem tactically desirable, particularly as the CMA endeavoured to be legally meticulous in its investigations. “Accordingly, Messrs Coupe and Burnley may have slipped down their Christmas card list with the CAT approach,” ​said Black.

Focus of probe

He doubted whether the challenge would significantly affect the final decision-making process, stressing his belief that the probe would focus on:

  • The outcome of the CMA’s shopper surveys
  • Suppliers’ evidence about how innovation, prices and choice might affect consumer interests
  • The balance between national and local matters

“We cannot call the final outcome, of course, and so we must wait until March 2019 at the earliest for the CMA’s view,” ​said Black.

“Substantial remedies could bring the deal down, while meeting those remedies may also be quite a time-consuming challenge. After all that, there will then be the matter of merging two businesses that do similar things very differently.”

Plans by Sainsbury’s and Asda to merge became public in April this year​.

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