Sainsbury’s and Asda have offered to close up to 150 supermarkets and 38 petrol stations in an attempt to persuade the competition watchdog that their £7bn merger should be allowed to go ahead.
The proposed closures are equivalent to only about half the number that the Competition and Markets Authority (CMA) has indicated could be required in order to gain permission for the merger. It is also considering blocking the merger entirely or insisting on the sale of one of the supermarket brand names.
Analysts believe the tie-up between the UK’s second and third-largest supermarket chains is doomed after the CMA warned last month that the deal threatened to push up prices and reduce the choice and quality of products on sale.
Sainsbury’s has already pledged to offer £1bn in price cuts funded by £1.6bn of cost savings from its merger with Asda, which would create a group with 2,800 supermarkets, convenience stores and petrol stations.
However, in a detailed version of Sainsbury’s and Asda’s official response to the CMA’s provisional findings published by the watchdog on Friday, the supermarket groups said that the sale of stores and petrol stations would give the opportunity for new entrants to come in or allow smaller rivals to expand rapidly.
Mike Coupe, the chief executive of Sainsbury’s, and Roger Burnley, the Asda chief executive, said in a joint statement: “We have asked the CMA to correct significant errors in its provisional findings. Its analysis fundamentally misunderstands how people shop today as well as ignores the intensity of competition and the dynamism of the UK grocery market, which evolves on an almost weekly basis.
“We have committed to £1bn of lower prices for customers within three years of our businesses merging and proposed a remedy package that would satisfy any reasonable concerns. We urge the CMA to properly reflect the evidence so that we can deliver savings for customers.
“We regret the uncertainty this process causes for our colleagues and want to reassure them that no stores would close because of this merger, with any divested stores run by a credible third party.”