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Asda-Sainsbury's regulator blocks Walmart's plan to sell its British supermarkets



UK's Competition and Markets Authority said Thursday it had blocked Wal-Mart's [ WMT ) and suggested the sale of its UK supermarket brand Asda Sainsbury & # 39; s . 19659002] ( JSAIY ) .

The deal estimated Asda £ 7.3 billion (9.4 billion) and would have created a major retailer with 2,800 branches and a combined turnover of around £ 51 billion ($ 66 billion).

The Antitrust Supervisor ruled that the proposed acquisition, which was agreed a year ago, would be bad for consumers, as it could lead to higher prices, inferior goods and a generally worse shopping experience. 1
9659004] "It's our responsibility to protect the millions of people who shop at Sainsbury's and Asda's every week," said Stuart McIntosh, who led the CMA investigation. "We have come to the conclusion that there is no effective way to address our concerns, except to block the merger."

Sainsbury said the verdict ignored the "dynamic and highly competitive" nature of the UK market.

Will the buyers lose?

"The concrete reason for the merger was to lower prices for customers," said CEO Mike Coupe in a statement.

  Walmart CEO Doug McMillon's total salary last year was nearly $ 24 million.

Sainbury's had promised to lower prices for a range of everyday products by 10% in the first three years after the merger. The two companies also committed to limit fuel prices at their gas stations. Blocking the deal means "effectively pulling £ 1 billion out of customers' pockets," Coupe said.

John Colley, a merging expert at Warwick Business School, challenged this claim.

"Over three years, it would have been impossible to judge [for Sainsbury’s] what prices would have been without the merger," he said.

If the deal had gone through, Asda-Sainsbury's and Tesco ( TSCDF ) would have accounted for almost 60% of the market, which has been highly competitive lately Years as German discounters like Aldi and Lidl grew fast.
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"The main beneficiaries of this merger would have been the shareholders of Asda-Sainsbury," said Colley. What will Walmart do?

Judith McKenna, CEO of Walmart International, said the company was disappointed with the decision.

"Our focus now is to continue to position Asda as a strong UK retailer serving customers," she said in a statement. "Walmart will ensure that Asda has the resources to do that."

Sainsbury's shares fell 6% in London.


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