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The proposed merger between Walmart-owned Asda and Sainsbury, which would have created the largest supermarket chain in the UK with a 30+ percent market share, has been blocked by the UK’s Competition and Markets Authority (CMA).

The CMA said that if the merger went through, it would result in higher prices and longer lines.

The BBC this morning says that “Sainsbury's boss Mike Coupe said the regulator was ‘effectively taking £1bn out of customers' pockets.’

“But he said the supermarkets had agreed to end the deal.

“Asda boss Roger Burnley said he was disappointed: ‘We were right to explore the potential merger with Sainsbury's, which would have delivered great benefits for customers and supported the long term, sustainable success of our business’.”

The BBC writes that “Sainsbury's and Asda had said the planned tie-up would have cut their costs, allowing them to lower prices for consumers across the UK. Analysts also believed it was designed to help the two supermarkets counter the rise of discounters Aldi and Lidl in the increasingly competitive grocery market.” The two companies had agreed to sell a number of stores and guarantee price cuts as a way of getting the deal through, but the CMA remained unconvinced.
KC's View:
Both companies now have to figure how to develop strategies based on a) being independent and b) competing with each other … which is kind of hard considering how much time they’ve spent talking about they are worse off this way. Plus, Walmart almost certainly will be looking to sell Asda to somebody, since it clearly wanted out of the UK.

I’m thinking Eddie Lampert will make a bid.