Sainsbury is cutting prices for the Asda deal

Sainsbury’s and Asda announce fuel cap as part of merger plan

Sainsbury's and Asda, the nation's second and third biggest supermarket chains respectively, unveiled merger plans in April 2018 to create a retail king that would leapfrog United Kingdom number one Tesco.

J Sainsbury PLC (LON:SBRY) and Wal-Mart Inc's (NYSE:WMT) Asda have promised to slash prices by £1bn each year as part of a series of proposed remedies to allay United Kingdom competition watchdog's concerns about their planned merger.

In February, the CMA threw a spanner in the works of the proposed "mega-merger" between two of Britain's biggest supermarkets, after they stated the deal would create a "substantial lessening of competition at both a national and local level", with potentially "a poorer overall shopping experience" for consumers.

The two groups said they would invest 300 million pounds in the first year after combining and a further 700 million over the following two years - reducing prices "by around 10 percent on everyday items". We are happy to be held to account for delivering on this commitment and to have our performance independently reviewed and to publish this annually.

In their detailed response to the Provisional Findings, Sainsbury's and Asda have sought to address these economic and legal errors.


The supermarkets expect £1.6bn in cost savings to arise from increased purchasing power with suppliers, putting Argos stores into Asda, jointly buying shared goods and service and reducing central costs.

Sainsbury's also promised to cap its fuel gross profit margin to no more than 3.5p per litre for five years, while Asda will guarantee its existing fuel pricing strategy.

Sainsbury's boss Mike Coupe, who lashed out at the CMA following its findings last month, and Asda chief executive, Roger Burnley said: "We hope that the CMA will properly take account of the evidence we have presented and correct its errors". Analysts had previously expected the regulator to demand.

They also said they were prepared to divest some supermarkets and petrol forecourts across both brands to get the deal through but did not provide figures.

"For Sainsbury's to forge on - with what many see as an already lost battle - shows how pivotal Sainsbury's feels consolidation at the top end of the grocery market is in order to stop long-term share decline at the Big Four, to use economies of scale and pressure on large suppliers to reduce shelf prices for shoppers", Brereton said.

Related:

Comments

Latest news

US abruptly endorses Israel's Golan sovereignty in big shift
They called on Congress to pass legislation that would formally "recognize Israel's sovereignty over the Golan Heights ". Pompeo visited Kuwait on the first leg of his five-day Middle East trip, before heading to Israel and lastly to Lebanon.

Volvo to keep eye on distracted, drunk drivers using in-vehicle cameras
In a Wednesday announcement , Volvo revealed plans to install a suite of in-car cameras and sensors to monitor drivers. However, Volvo claims that if the system could also detect if a driver is intoxicated or falling asleep.

Israel Ranks 13th in Annual UN 'World Happiness Report'
The only non-European countries to feature were New Zealand and Canada which were eighth and ninth place respectively. The 2019 list only changed a little, with Austria nudging Australia out of the top 10 list.

Nokia 7 Plus phones 'secretly transmitting users' private data to China'
Upon further inspection, it was revealed that the code on the Nokia 7 Plus is pretty standard for phones sold in China. HMD also states, "this has now been fixed and nearly any device affected by this error has now installed the update".

Gov. Mike Parson declares state of emergency amid flooding
Army Corps of Engineers said water was also flowing over several other levees, including one near Missouri's Bean Lake. The flooding has damaged hundreds of homes in Nebraska, Iowa and Missouri, and been blamed for at least three deaths.

Other news