Sainsbury’s (LON: SBRY) and Asda may have to axe over 450 stores in order to complete the merger.
The Competition and Markets Authority (CMA) have said the merging of the supermarkets could damage the competition in 463 UK places.
“At a local level, the parties’ stores overlap in several hundred local areas across the UK,” said the CMA.
The findings come following the first phase of the investigation into the proposed £12 billion merger, where the CMA released a 21-page ruling published on Thursday revealing the results.
The watchdog announced last week of plans to carry out a more in-depth “phase two” investigation.
A spokesperson for Sainsbury’s and Asda said: “We welcome the start of the phase two process. The grocery market has changed significantly in the last decade and is more competitive than ever, with the rise of discount formats, online grocery and food delivery businesses.”
“We look forward to working with the CMA on the phase two inquiry, where we expect it to conduct a full review of the market and take these changed market dynamics into consideration.”
“Customers will be the big winners from this combination. By bringing the two businesses together, we will be able to invest further in more convenient ways of shopping while lowering prices and reducing the cost of living for millions of UK households.”
The first phase of the investigation for the Sainsbury’s and Asda merger only looked at the effect on the two chains’ medium-sized and largest stores and those of their four traditional rivals. Discount supermarkets Aldi and Lidl were not considered.
If the deal is agreed upon it will create a chain with revenues of £51 billion and there would be a network of 2,800 Sainsbury’s, Asda and Argos stores across the UK.
