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Sainsbury’s share price: Supplier sees Asda deal as ‘extremely detrimental’ to consumers

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An unidentified major supermarket supplier argues that J Sainsbury’s (LON:SBRY) proposed tie-up with Asda would be ‘extremely detrimental’ to consumers, Reuters has reported. The comments come amid the ongoing Competition and Markets Authority’s (CMA) in-depth investigation into the merger which is set to create Britain’s biggest supermarket, surpassing Tesco (LON:TSCO).

Sainsbury’s share price has been subdued in London this morning, having given up 0.66 percent to 313.70p as of 08:49 GMT. The stock, however, is outperforming the broader market selloff which has seen the benchmark FTSE 100 index lose 1.01 percent to 6,982.17 points so far in today’s session.

‘Extremely detrimental’ merger

Reuters reported yesterday that an unidentified major supermarket supplier had argued in a submission to the CMA that Sainsbury’s tie-up with Asda would be ‘extremely detrimental’ to consumers. The supplier explained that the combined group and Tesco would benefit from a duopoly with 60 percent of Britain’s grocery market.

“This will have significant negative implications and raise material competition issues at all levels of the supply and distribution chain, which ultimately will be extremely detrimental for consumer welfare,” the supplier pointed out, adding that the proposed combination had the  potential to facilitate collusion between Tesco and Sainsbury’s/Asda, ‘ultimately harming consumers’.

The CMA’s deadline for its in-depth review is March 5 next year.

Latest Kantar Worldpanel data

In other Sainsbury’s news, Kantar Worldpanel revealed yesterday that UK grocery sales at the blue-chip supermarket had fallen by 0.6 percent in the 12 weeks to November 4, marking the first decline for the company since June. The group’s e-commerce channel, however, continued to be a bright spot, achieving double digit growth as it reached seven percent of Sainsbury’s total shopper base.

As of 09:03 GMT, Wednesday, 14 November, J Sainsbury plc share price is 313.70p.

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