The Competition and Markets Authority (CMA) has long held the position that allowing the merger of Sainsbury’s and Asda would lead to reduced competition and, ultimately, higher prices for consumers. However, in today’s rapidly evolving retail landscape, this view appears outdated. The grocery market has fundamentally changed, with increasing pressure from discount retailers Aldi and Lidl, the growing presence of Amazon in grocery retail, and the continuous shift towards online shopping. In this new environment, the merger should not only be reconsidered—it should be allowed to proceed as a necessary move for survival.
The Myth of Reduced Competition
The primary argument against the merger has been that it would lead to a lack of competition and, consequently, price increases. This assumption fails to consider the aggressive expansion of Aldi and Lidl, which continue to take market share from the traditional big four UK supermarkets. These discount retailers have reshaped consumer behaviour, forcing established chains to compete on price and efficiency. Even if Sainsbury’s and Asda were to merge, they would still face relentless competition from these cost-effective alternatives.
Additionally, the rise of online grocery shopping has introduced a new level of competition. Amazon’s growing focus on the food retail sector, along with Ocado’s increasing dominance, means that traditional brick-and-mortar supermarkets must innovate or risk losing their relevance. The presence of multiple competitors ensures that no single entity can control prices unchecked.
Survival in a Shifting Market
The grocery market in the UK has changed dramatically over the past decade. The margins are razor-thin, and supermarkets are under enormous pressure from rising costs, supply chain challenges, and changing consumer habits. The Sainsbury’s-Asda merger is not about creating a monopoly—it’s about ensuring these retailers can survive and continue to provide affordable products to British consumers.
In contrast to the CMA’s concerns, a merger could lead to lower prices rather than higher ones. A combined Sainsbury’s-Asda operation would have greater negotiating power with suppliers, allowing them to pass on cost savings to consumers. Additionally, efficiency savings from streamlining logistics and operations could further reduce prices, creating a more competitive market overall.
CMA’s Role: Protecting Consumers or Obstructing Progress?
The CMA claims to protect consumers, yet blocking mergers such as this could have the opposite effect. If supermarkets like Sainsbury’s and Asda struggle to compete, they may be forced to close stores, reduce staff, or cut back on investment—decisions that could negatively impact both employees and customers. Meanwhile, international competitors like Amazon continue to expand without facing similar scrutiny, creating an uneven playing field for UK-based retailers.
Instead of outright blocking the merger, the CMA should work with Sainsbury’s and Asda to set conditions that guarantee consumer benefits. Rather than preventing consolidation, regulators should encourage mergers that ensure stability and enhance price competitiveness, particularly in an era where e-commerce and discount retailers are changing the game.
Time for the CMA to Step Aside
The UK’s grocery market is evolving, and regulatory bodies must adapt to these changes. The Sainsbury’s-Asda merger is not a threat to competition—it is a necessity for survival. With Aldi, Lidl, and Amazon continuing to expand, there is no risk of reduced competition. If anything, blocking the merger could weaken UK supermarket chains at a time when they need strength the most.
ISN believes it is time for the CMA to step aside and allow the market to operate freely. A well-structured merger with guarantees of price stability could benefit everyone—consumers, retailers, and the UK economy alike. The future of grocery retail is about adaptation, and regulatory bodies should enable, not hinder, this progress.
