Sainsburys and Asda are willing to close up to 150 stores as growing concerns from competitors are being shared with authorities.
Two of Britains biggest supermarkets Sainsbury’s and Asda are trying to keep there merger bid alive after new reports published by the Competition and Markets Authority (CMA) which detailed that the proposed merger would lead to higher costs and low quality.
The merge between the two supermarkets will only be allowed to happen if a significant number of stores along with petrol stations are closed so it does not stifle competition with other leading supermarkets, with the amount considered to be around 300. The CMA are concerned with how this will affect suppliers as its believed the power that the companies will hold after the merger will be too great.
Not only do the CMA disapprove of the proposed move so does the (GMB) General and Municipal Workers’ Union as many people will be made redundant and left to fend for themselves.
Richard Lim, chief executive of research consultancy Retail Economics said ” it’s inevitable that there will be job losses as the two firms combine operations. In the end it’s inevitable to have fewer people working in the combined unit,” he says. “The motivation [for the merger] is driving down costs.”
While Gary Carter, national officer at trade union GMB, said: “This offer to flog off 150 stores is both desperate and disrespectful. This is people’s lives and livelihoods we’re talking about.”
It appears that Sainsburys & Asda are at a stand off with the CMA as they claim the proposal by the CMA is ” impossible to implement” and was “prohibition in all but name.
Even Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown acknowledges that changes will be made, as she said: “At first glance, the proposals look like a decent compromise in response to the CMA’s previous ruling.
“However, the proposed number of store sales is unlikely to be enough to appease the competition regulator.”
The CMA will have there final report by 30th of April and will have to make a decision on whether they have responded adequately to the initial responses.