The proposed merger of Sainsbury’s and Asda is likely to be the subject of a competition review, the watchdog confirmed on Monday.
The deal, which was first reported over the weekend, would result in a supermarket group bigger than current market leader, Tesco .
The Competition and Markets Authority ( CMA ) said: “In major mergers, it is typical for the companies to engage in ‘pre-notification’ discussions with the CMA to ensure they are supplying the information it will require before a formal investigation can begin. These discussions can last for a number of weeks.”
Once a formal investigation begins, the CMA conducts a phase 1 review, which takes up to 40 working days. In this stage, the regulator “would assess whether the deal could reduce competition and choice for shoppers”, the CMA said.
After the first phase, the deal can be cleared if it is not deemed to be a competition risk. If it is, the case will be referred for an in-depth phase 2 investigation, which could run for up to 24 weeks.
Patrick O’Brien, UK research director at Global Data Retail, said that as there are currently 75 Asda stores in the same postcode district as a Sainsbury’s (excluding Sainsbury’s Locals), it is expected that the CMA “will demand disposals”.
However, Sainsbury’s CEO Mike Coupe , who will run the new combined company if the deal goes through, told the BBC on Monday morning: “We're confident there will be no store closures and therefore no job losses in the stores."
Sainsbury's reported its results today, showing sales and profit grew last year.
