Asda and Sainsbury’s promise fuel cap as part of merger plan

Wednesday, March 20, 2019

Last April, supermarket chains Asda and Sainsbury’s announced that they were planning to merge in a deal that would see them become the biggest supermarket group in the country. 

 

The two organisations have now announced plans to cap fuel price profits as a part of their proposed merger. 

 

The Competition and Markets Authority (CMA) released a statement in February this year raising concerns over the rising cost of fuel, stating that prices could rise at more than 100 locations where Sainsbury’s and Asda fuel stations overlap. 

 

In response to the competition watchdog’s statement, Sainsbury’s and Asda said that the analysis had “significant errors” and set out more details regarding their post-merger business strategy.

 

Referring to fuel prices, Sainsbury’s plan to set a 3.5% gross profit cap on its fuel prices for the first five years, and Asda plan to continue its current fuel pricing strategy. Their statement also added that both businesses would look at disposing of filling stations if they posed a genuine threat to competition. 

 

“Sainsbury’s and Asda have also responded to the Notice of Proposed Remedies by outlining supermarket and petrol forecourt divestments across both brands that would satisfy reasonable concerns regarding any substantial lessening of competition as a result of the merger by applying a conservative yet reasonable threshold.”
 

Sainsbury’s chief executive, Mike Coupe and Asda chief executive, Roger Burnley released a joint statement: “We are trying to bring our businesses together so that we can help millions of customers make significant savings on their shopping and their fuel costs, two of their biggest regular outgoings. 

 

“We are committing to reducing prices by £1 billion per year by the third year which would reduce prices by around 10 per cent on everyday items. 

 

“We hope that the CMA will properly take account of the evidence we have presented and correct its errors. We have proposed a reasonable yet conservative remedy package and hope the CMA considers this so that we can deliver the cost savings for customers.”

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