Sainsbury's and Asda merger could cut hole in shoppers' pockets, Waitrose warns

Three major supermarkets have voiced concerns over the merger of Sainsbury's and Asda (Source: Getty)

The proposed merger of Asda and Sainsbury’s will cause substantial harm to customers, rival chain Waitrose warned today.

It said the merger could force independent retailers to close in the face of competition from the new giant, leaving shoppers with fewer alternatives, while prices could rise.

In comments to the Competition and Markets Authority (CMA), which is probing the tie-up, Waitrose said: “We consider that the proposed merger threatens to bring significant changes to the structure of the UK retail sector in a manner that we believe would be likely to substantially harm the competitive process and thereby consumers.”

Sainsbury’s is planning to acquire Asda for £12bn, creating a giant that could command £1 in every £3 spent on groceries.

The supermarkets have already been told they overlap in hundreds of areas, meaning they may have to sell off stores to appease the CMA, which is set to rule on the case on 5 March.

The competition watchdog today published rivals' remarks on how the deal could impact the industry.

Fellow supermarket Aldi said the "proposed merger would cause a significant lessening of this competition both locally and nationally”, while Morrisons said the merger “raises a number of potential serious competition concerns”.

The British Brands Group (BBG), which represents manufacturers of branded products, said its members could be harmed if too much buying power is concentrated in one player.

A combined Sainsbury's and Asda, alongside Tesco, would also control around 70 per cent of the country’s market for branded goods, the BBG said.

The supermarkets’ dominance would allow them to squeeze down their payments to suppliers, forcing manufacturers to compromise on quality and innovation, the lobby group warned.

Earlier today Sainsbury's boss Mike Coupe said he was confident the merger was good for shoppers and would gain approval.

"We believe that by bringing the two organisations together there is a unique opportunity to lower costs and ultimately those costs will be passed back to customers in the form of lower prices," he told the Today programme.