The UK Competition and Markets authority (CMA) could examine whether limited assortment discounters (LADs) and online platforms are competitive threats to large grocery players in its review of the acquisition of supermarket chain Asda by J Sainsbury [LON:SBRY], six competition lawyers told this news service.
Last weekend, J Sainsbury announced it would acquire Asda from Bentonville, Arkansas-based Walmart [NYSE:WMT] in a GBP 7.3bn cash-and-shares transaction. After the deal, Walmart will own 42% of Sainsbury’s shares and 29.9% of its voting rights.
Sainsbury’s expects the CMA review of the deal to be fast-tracked to Phase II, Sainsbury’s CFO Kevin O’Byrne said during a call on Monday.
By skipping to Phase II, the parties could save up to five weeks on their deal timeline, said a first competition lawyer, adding that parties thought Phase I clearance was impossible.
Getting the deal through looks challenging, a second and third lawyer agreed. The deal is at best a ‘four to three’ at a national level, the second lawyer noted. However, arguments from the parties to include LADs – such as Lidl and Aldi – as competitors in the grocery space could alleviate concerns arising from horizontal overlaps between the parties, argued the first lawyer and a third.