Morrisons and Tesco flag concerns over Sainsbury’s-Asda merger

Morrisons and Tesco have added their voice to the growing chorus of retailers which have spoken out against the proposed £12bn merger between Asda and Sainsbury’s.

Both grocers have this week brought into question Sainsbury’s planned takeover of rival Asda, which would see Britain’s second and third largest supermarkets overtake Tesco to the top spot.

In hearings released by the UK’s competition watchdog this week, Tesco has said that the deal was a “challenge in terms of economics, as there are few direct customer benefits”, adding that the deal should not go ahead unless “extensive remedies” were provided.

Meanwhile, Morrisons raised fears that a “duopoly” comprising Tesco and the newly-merged business would potentially lead to higher prices in the wake of less competition in the market.

Morrisons said that “the creation of this duopoly could mean that Tesco and the merged entity would potentially increase their delivery charges in order to make their businesses more profitable, given the lack of competition in some parts of the UK.”

Such concerns come less than a fortnight after Lidl and Waitrose also raised issue with the Competition and Markets Authority (CMA), which has been surveying the worries of the grocery industry in its probe of the deal.

The CMA, which launched its investigation into the deal back in August, is also looking at whether the merged company could use its size to squeeze the prices it pays suppliers.