Blocking of Asda merger 'good for farmers'

Asda (Chris Radburn/PA)
Asda (Chris Radburn/PA)

Margaret Canning and PA

The collapse of the Asda-Sainsbury's merger has saved local farmers from "unacceptable" price pressures, the Ulster Farmers' Union (UFU) has said.

The competition watchdog announced yesterday it had blocked the proposed £12bn deal on the grounds that it would damage competition and result in higher prices for consumers.

After the announcement, Sainsbury's and Walmart-owned Asda mutually agreed to terminate the move.

In its final report into the plan, the Competition and Markets Authority (CMA) found that the deal would lead to increased prices in stores, online and at petrol stations.

Shoppers and motorists would be "worse off" if the supermarkets were to merge, the CMA maintained, adding that a tie-up would lead to price rises, reductions in the quality and range of products and a poorer overall retail experience.

The watchdog claimed that the deal would have resulted in a "substantial lessening of competition" at both a national and local level for people shopping in supermarkets.

UFU president Ivor Ferguson said the CMA's announcement did not come as a surprise.

"Its findings highlight the impact that the proposed merger could have had on the entire food supply chain, and for us the key concern has always been on the potential impact it could have on our members," he added.

Get the latest news from the Farming Independent team 3 times a week.

Mr Ferguson also stressed that the UFU had always believed that producers would ultimately have had to shoulder the burden of any merger.

"It has always been our view that we, the primary producers, would most likely have been hit with pressure on prices being paid for our high-quality products due to the increased pricing power of this merger," he said.

"This would have been completely unacceptable given that margins are already tight on many farm businesses.

"The UFU will continue to monitor the decisions which both of these major retailers will be taking going forward as a result of this announcement."

Sainsbury's boss Mike Coupe said that the decision effectively took £1bn in potential savings out of customers' pockets.

Sainsbury's has 14 stores across Northern Ireland and a 17.3% share of the grocery market, while Asda has a 17% share and 17 local stores.

The supermarkets offered to sell 150 branches as part of efforts to address competition concerns and claimed that shoppers would be deprived of lower prices should the deal be blocked.

Online Editors

For Stories Like This and More
Download the Free Farming Independent App