Sainsbury’s (LON:SBRY) £7.3 billion takeover of Asda (NYSE:WMT) has been blocked by the Competition and Markets Authority (CMA) because it will create a “poorer overall shopping experience”.
Shares in Sainsbury’s were trading over 6% lower following the announcement.
According to the Competitions and Markets Authority, consumers would not benefit from the merger. This is due to an expected increase in prices, reductions in the quality and range of products on offer and a poorer shopping experience for consumers across Britain.
The CMA found that the merger would lead to motorists paying higher prices at over 125 locations in which Sainsbury’s and Asda petrol stations are closely located.
The plan to merge the two supermarkets was revealed last year and it had the potential to be the nation’s largest private sector employer with 330,000 employees.
“It’s our responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week. Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers,” said Stuart McIntosh, chair of the inquiry group.
“We have concluded that there is no effective way of addressing our concerns, other than to block the merger,” he continued.
Sainsbury’s and Walmart owned Asda are two of the nation’s largest supermarkets, ranked second and third respectively.
Earlier this year, the watchdog released a preliminary verdict which highlighted “extensive competition concerns” in its findings.
As of April, latest industry data shows that Asda had actually overtaken Sainsbury’s in main store sales. Kantar revealed that Asda’s share in the market grew to 15.4%, with Sainsbury’s at 15.3%.
Elsewhere in the sector, Aldi and Lidl remain strong, outperforming major UK supermarkets at the end of last year over the festive period.
At 08:25 BST Thursday, shares in Sainsbury plc (LON:SBRY) were trading at -6.27%.