Sainsbury's-Asda merger blocked by regulator

What do you think of the proposed Sainsbury's-Asda merger being blocked by regulators? Regulators were convinced that the merger would lead to a rise in prices for consumers.

I would also like to remind everyone about that beautiful moment when Mike Coupe CEO of Sainsbury's sang a beautiful rendition of 'We're in the money' before his Asda merger interview a year ago. :rofl:

(Only 30 seconds long, worth a watch!) :biggrin:

https://www.youtube.com/watch?v=I3q-zBLZEW4&feature=youtu.be

Reference:
https://www.bbc.co.uk/news/business-48048596

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Reply 1

claireestelle

Original post by Themysticalegg

(Only 30 seconds long, worth a watch!) :biggrin:

https://www.youtube.com/watch?v=I3q-zBLZEW4&feature=youtu.be

Reference:
https://www.bbc.co.uk/news/business-48048596

I'm glad it was blocked, sainsburys is too pricey and we buy most things from asda and if the prices went end up we'd have to drive 3 miles to lidl or aldi which would be frustrating.

Reply 2

username1799249

Of course they are in the money. And rightly so - all of our pension funds are invested in the likes of Sainsburys and Asda. It will interesting to see what happens in the grocery market in the next 5 years especially once Brexit hits. Morrison's seem to be taking the ground that used to be occupied by Safeway and which ultimately caused their demise.

Reply 3

Themysticalegg

Yep and realistically Tesco + Sainsbury's + Asda = 60% market share they could of increased and decreased prices in the short run with little repercussions in areas without a cheaper competitor like Aldi/Lidl. Waitrose and M&S pose little threat to these three leaving Morrisons. Also the ones without cars or poor public transport will have little to say in this matter.

Original post by claireestelle

I'm glad it was blocked, sainsburys is too pricey and we buy most things from asda and if the prices went end up we'd have to drive 3 miles to lidl or aldi which would be frustrating.

Original post by ByEeek

Indeed greed is natural, I can also foresee Morrisons struggling.

(edited 4 years ago)

Reply 4

CoolCavy

Volunteer Team

Original post by claireestelle

I'm glad it was blocked, sainsburys is too pricey and we buy most things from asda and if the prices went end up we'd have to drive 3 miles to lidl or aldi which would be frustrating.

Reply 5

Nx23

Its a good thing that it was blocked because tbh saisburys and asda only wanted to merge cuz they wanted a larger market share and profits but they didn't take into consideration others that would be affected like shareholders and stakeholders both external n internal if the merger had happened employees could have potentially been made redundant due to some stores closing down, suppliers would have been affected cuz before they could have charged both Sainsburys and asda separately for products before but now as they would be merging they wouldn't be able to gain that extra profit for the produce they sell (e.g local farmers) customers would end up having little choice of products and would have to pay more for the products they buy so basically overall in my opinion im happy that the merger didn't happen :smile:

Reply 6

Reality Check

Original post by Themysticalegg

(Only 30 seconds long, worth a watch!) :biggrin:

https://www.youtube.com/watch?v=I3q-zBLZEW4&feature=youtu.be

Reference:
https://www.bbc.co.uk/news/business-48048596

This was never going to get past the regulators. They would have ended up having something like 60% share of the UK grocery market, which is clearly not conducive to increased competition. It's oligopolistic enough, without making it worse.

Reply 7

username1799249

Original post by Themysticalegg

Indeed greed is natural, I can also foresee Morrisons struggling.

Not just Morrisons. Profit margins on food are now around 1-2% and the discounters contine to bite.

Reply 8

3121

Why would they put their prices up? Consumers aren’t fools these days and will know if prices go up and will change their supermarket, it’s not like we don’t have choices. The whole aim of the merger was to secure a strong market share in the face of a rising share from companies like Lidl and Aldi. As well as a threat from amazon expanding its Pantry, Prime Now and smart supermarket businesses.

(edited 4 years ago)

Reply 9

ANM775

Original post by 3121

If 60% of shops are owned by them another supermarket may be too far away for consumers so they end up buying the higher prices

Honestly if an apple goes up 5p at your local Sainsbury's are you really gonna travel 5 miles to the next big Tesco's to get it cheaper?

The fuel costs alone will make it not worth it

Reply 10

Andrew97

Entertainment Forum Helper, Debate & Current Affairs Helper

Sainsburys + Asda would be nowhere close to 60%, more like 30%

Reply 11

Themysticalegg

Original post by Andrew97

Sainsburys + Asda would be nowhere close to 60%, more like 30%

Add Tesco and it reaches 60%

Reply 12

ThePootisPower

Not surprised. It'd have been a disgustingly bad idea to let it happen. Really, we need more competitive supermarket chains and more independent stores, not more conglomerates and mergers. Not sure how that will happen though.

Reply 13

Drewski

Original post by ThePootisPower

It won't. Especially after the Tesco / Booker merger.

One of Sainsbury's or Morrisons will be gone in a few years.

Reply 14

ThePootisPower

Original post by Drewski

It won't. Especially after the Tesco / Booker merger.

One of Sainsbury's or Morrisons will be gone in a few years.

I think a few years is a bit of an underestimate. I give Morrison’s 8 years to reverse it’s fortunes before it goes bust. Sainsbury’s should stick around for a while I reckon.

Reply 15

Lannister043

What ever happened to Safeway?

Reply 16

Drewski

Original post by Lannister043

What ever happened to Safeway?

Sold to Morrisons in 04

Reply 17

Lannister043

Original post by Drewski

Sold to Morrisons in 04

04? Time really is flying by.

Reply 18

3121

Original post by ANM775

Where did the number 60% come from? They were going to be forced to sell off a number of shops allowing room for other businesses to expand, there market share would’ve been close to Tesco’s. The regulator could’ve easily prevented your concern by limiting their market power.

If it was only the apple going up I don’t think that’s enough to justify blocking the merger, if I was going to spend significantly more on my weekly shop then yes I’d shop elsewhere. I’ve yet to find a town that has a Sainsbury’s or Asda but no Tesco, I’ve come across many with a Tesco and no Sainsbury’s or Asda but I don’t see the regulators doing anything about it.

I remember going to a town with a 2 Tesco’s and no nearby competitors. But the prices seemed fair and the same as prices near me

Your points are valid but these are points the regulators could’ve easily addressed and ASDA/Sainsbury’s already did. The sell off of stores was a brilliant opportunity for smaller businesses especially the petrol stations.

Reply 19

Themysticalegg

Original post by 3121

The 60% market share comes from the concern that Asda-Sainsbury's + Tesco = 60% and there could be less incentive to cut costs due to less competition. As you said if an area only had a Sainsbury's + Asda + Tesco and one of these decided to raise prices, the other could potentially follow through with minimal repercussions. As some people may have poor public transport links, don't own a car, do not feel the cost of going to a Lidl/Aldi/Morrisons or any other viable alternative is worth it. That being said the opposite could of happened too with bigger economies of scale from the merger forcing suppliers to lower their prices. The only issue is wouldn't selling shops just increase unemployment as there's no need for a Sainsbury's and Asda in the same town/city for example? Although I can see the opportunity for smaller businesses willing to take the petrol stations.