GUPPI In Supermarket Mergers: the UK’s Asda/sainsbury Case

GUPPI In Supermarket Mergers: the UK’s Asda/sainsbury Case

 

Howard W. Smith

University of Oxford - Department of Economics

Abstract

The UK supermarket industry has a high profile because of its large share of household budgets. In 2003 the UK competition authorities blocked all potential mergers between the top-three firms and the fourth. After this, there was an apparent consensus that mergers between the largest four supermarkets would be unsuccessful with competition authorities. In 2018, Asda and Sainsbury two of the largest four firms, decided to challenge the consensus with a proposal to merge. Their bid failed. This chapter discusses the case. We discuss two changes in the 15 years between 2003 and 2018: (i) changes to the industry including the rise of new low-price firms and (ii) changes to the way mergers are assessed by competition authorities, particularly the use of a new indicator of competitive harm, namely, the Gross Upward Pricing Pressure Index (GUPPI).