Reed Smith Client Alerts

The proposed Sainsbury’s/Asda merger would have combined the second- and third-largest UK supermarkets. The merger would also have created the largest retailer of fuel by volume in the UK. In the face of this, the UK Competition and Markets Authority (CMA) concluded that the prohibition of the merger was the only way to go.

Authors: Edward S. Miller Marjorie C. Holmes Emily Daniels

Perhaps of greater note, however, is the 10-year ban imposed by the CMA on the parties’ attempting a similar deal in the future. In this alert we will review the CMA’s decision and its powers, and consider the future for UK competition law.

The ban

On 9 July 2019, the CMA imposed a 10-year ban on both Sainsbury’s and Asda obtaining a controlling interest in the other, or any entity holding an interest in the other, without the CMA’s prior written consent. The prohibition also includes the acquisition of a small number of assets (for example, theoretically even a single store) where such acquisition would result in a relevant merger situation (i.e., the businesses ceasing to be distinct and the merger meeting the jurisdictional threshold tests) even if it did not raise competition concerns.