Sainsbury’s and Asda are likely to have to sell one of their Charlton stores if the two supermarket giants are allowed to go through with their plans to merge, according a report from the competition watchdog.
The two superstores are among 629 locations where a tie-up between the two companies could result in a “substantial lessening of competition”, the Competition and Markets Authority said in a provisional report on the merger plan, released on Wednesday.
The two supermarket giants announced plans for a tie-up last April, and it has been widely reported that the combined company would take one pound out of every three spent by UK grocery shoppers. But the CMA says a combination of the two firms could mean shoppers would “face higher prices, reduced quality and choice, and a poorer overall shopping experience across the UK”.
While the strength of the CMA’s concerns about the merger could force the two companies to abandon their plans, Sainsbury’s and Asda have said they want to go ahead with the tie-up.
The full report was made public on Thursday afternoon. As well as the two Charlton stores, the CMA has raised issues about stores in Lewisham, New Cross, Abbey Wood, Kidbrooke, Peckham, Deptford, Old Kent Road, Isle of Dogs, Bexleyheath and Belvedere.
Both retailers also have petrol outlets within close proximity of each other, as Sainsbury’s retailed the filling station from its former Greenwich store, now replaced by an Ikea. These outlets are also highlighted by the CMA.
As well as their two Bugsby’s Way superstores, Sainsbury’s also has a Local supermarket on Charlton Church Lane. This is not included in the CMA’s list of concerns.
Of the two Charlton superstores, the Asda branch is arguably the most vulnerable to a sale. The store has been trading for 35 years, making it the second oldest in the Charlton retail area (Makro is 10 years older) and its facilities are dated. It could be seen as a target for Lidl, which is currently applying for planning permission to convert two units in an adjacent shopping park into a supermarket, or the new Tesco low-cost brand Jack’s.
The Charlton store only opened in 2015, and there have been anecdotal reports that trading has been slower than expected – one consequence of its move from east Greenwich was that the store was cut off from shoppers who would take a bus down the hill from Blackheath. But a new store could be attractive to a rival such as Morrisons, which lacks a store between Peckham, Welling and Thamesmead.
The full Competition and Markets Authority report will be released in April.
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