J Sainsbury plc and Asda Group Limited has submitted its responses to the Competition and Markets Authority (CMA) Provisional Findings and Notice of Proposed Remedies document, stating it ‘strongly disagrees’ with the findings.
Sainsbury’s and Asda say that both businesses strongly disagree with the CMA’s Provisional Findings and has found the CMA’s analysis of its proposed merger to contain significant errors.
In a detailed response to the Provisional Findings, Sainsbury’s and Asda stated that they have sought to address these ‘economic and legal errors.’
Sainsbury’s and Asda have specifically outlined supermarket forecourt divestments across both brands and, in addition, have made the following post-merger commitments:
• To deliver £1 billion of lower prices annually by the third-year post-completion.
• To invest £300 million in the first year of the combination and a further £700 million over the following two years as the cost savings flow through. They claim this would reduce prices by around 10% on everyday items.
• The price commitments will be independently reviewed by a third party and the parties will publish the performance each year, holding them to public account.
The two businesses also aim to create cost savings in three ways:
1. By securing lower purchasing prices from suppliers, predominantly by paying the lower of the two prices that Sainsbury’s and Asda currently pay large suppliers for identical products.
2. By putting Argos stores into Asda.
3. By jointly buying shared goods and services and reducing central costs.
Sainsbury’s and Asda have also given the details of its estimated £1.6 billion cost savings to the CMA.
The businesses states it strongly encourages the CMA to recognise that there is a clear benefit to consumers from combining the two companies, improving the cost of living for millions of UK households to the tune of £1 billion annually.
In a combined statement, Sainsbury’s chief executive, Mike Coupe and Asda chief executive, Roger Burnley said: “We are trying to bring our businesses together so that we can help millions of customers make significant savings on their shopping and their fuel costs, two of their biggest regular outgoings.
“We are committing to reducing prices by £1 billion per year by the third year which would reduce prices by around 10% on everyday items. We are happy to be held to account for delivering on this commitment and to have our performance independently reviewed and to publish this annually.
“We hope that the CMA will properly take account of the evidence we have presented and correct its errors. We have proposed a reasonable yet conservative remedy package and hope the CMA considers this so that we can deliver the cost savings for customers.”
The CMA is expected to publish Sainsbury’s and Asda’s responses to the Provisional Findings and Notice of Possible Remedies in due course, with a final report expected by 30th April.