The National Farmers’ Union has warned that Sainsbury’s proposed takeover of Asda could deepen pressure on suppliers while reducing the range and innovation available to shoppers.
British supermarket group Sainsbury’s agreed in April to buy Walmart’s Asda in a £7.3 billion cash-and-shares deal worth about $9.4 billion. If cleared by the competition regulator, the combined business would overtake Tesco as Britain’s biggest supermarket group.
The Competition and Markets Authority is examining the transaction and has been taking evidence from interested parties. In oral evidence to the CMA, the NFU’s head of food and farming, Philip Hambling, said farmers were worried about whether the merged company could deliver its promised 10 percent saving for shoppers without shifting the pressure back onto producers.
“At a time when farms are already facing intense price pressure, the prospect of a further squeeze on price leaves farmers concerned about the potential impacts on their businesses,” he said.
Hambling added: “Continually squeezing margins can take away the ability of the food and farming industry to invest and improve quality, range and sustainability.”
Sainsbury’s and Asda have argued that the merger would cut prices, improve the customer offer across both brands and give suppliers room to expand their businesses. The two grocers have also said they do not expect the CMA to demand store sales on a scale that would make the deal unattractive.
The regulator said last month it expected provisional findings early next year, with a final report due in March.
Reporting by James Davey; Editing by Emelia Sithole-Matarise
