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Sainsbury’s and Asda challenge CMA over merger probe

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Sainsbury’s and Asda are seeking to take the competition watchdog to a judicial review – saying they have not been given enough time to argue the case for their merger.

The planned tie-up between Britain’s second and third-biggest supermarkets has been referred for an in-depth investigation by the Competition and Markets Authority (CMA), expected to be completed by the start of March.

But Sainsbury’s said on Wednesday that the two companies felt the current timetable “does not give the parties or the CMA sufficient time to provide and consider all the evidence given the unprecedented scale and complexity of the case”.

The watchdog responded by saying that giving the extra time the two retailers are asking for would put the its ability to complete its investigation by the required deadline “at very serious risk”.

Shares in Sainsbury’s fell 4%.

The company said the two supermarkets had “engaged constructively” with the watchdog and made “repeated requests for additional time”.

Sainsbury’s added: “Specifically, we have asked the CMA for an additional 11 working days over the Christmas period to respond to a large amount of material recently provided to us.”

The statement revealed that both companies will lodge an application on Wednesday with the Competition Appeal Tribunal for a judicial review of the CMA probe.

It said the retailers were “confident in the merits of the deal” and their ability to deliver cost savings, adding: “By bringing our two businesses together, we will invest further in range, quality and customer service, while lowering prices and reducing the cost of living for millions of UK households.”

Responding to the statement, the CMA said: “Our first priority in this investigation has, and will continue to be, assessing if shoppers would face higher prices or a lower quality of service as a result of the merger and, if so, to prevent that from happening.”

It said it had done all it could to help Sainsbury’s and Asda carry out including extending certain administrative deadlines.

But it added: “If we gave the companies the extra time they are now asking for, it would put our ability to complete the investigation by the required deadline at very serious risk.

“As with all of our merger reviews, we construct our timetable to ensure that everyone has the chance to have their say, including customers, the companies involved and suppliers.”

The CMA has previously said that it will not allow the proposed merger to go ahead if it will leave shoppers worse off. It is also possible that the investigation will mean some of the company’s stores having to be sold.

A deal between Sainsbury’s and Asda would create a grocery powerhouse, overtaking Tesco as the market leader.

It would have 2,800 stores across the UK – including the Argos business already owned by Sainsbury’s – with combined revenues of £51bn.

The chains – which plan to maintain both supermarket brands – have said the merger would allow them to pass on a 10% reduction in costs to shoppers.

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