Wednesday, March 18, 2020
We consider the Competition and Markets Authority (CMA) investigation into the proposed merger of UK grocery and fuel retailers Sainsbury’s and Asda. The CMA prohibited the merger in April 2019, based on a finding of widespread competition concerns. In this article we examine in particular the CMA’s assessments of the proposed merger’s effects on the merging parties’ unilateral incentives to worsen their offering across their businesses—for example, by raising supermarket product prices nationwide.
We note that the CMA’s concerns on a national basis arose exclusively from the aggregation of the competitive impacts in individual local areas. We consider to what extent this is likely to be the case in other mergers with somewhat similar features. We also consider under what circumstances an assessment of national-level concerns is necessary when the relevant geographic markets have been defined as local. We address the relationship between the CMA’s national-level analysis and its assessments of the merging parties’ incentives to worsen their offerings at specific stores. Finally, we discuss the ways in which the CMA’s national-level concerns affected its analysis of possible remedies.