Morrisons has warned competition authorities that the proposed merger between Sainsbury’s and Asda would create “an effective duopoly” in grocery retail.
The Bradford-based retailer said the combined business and Tesco would together control “in excess of 60% of the market”.
In a hearing with the Competition and Markets Authority (CMA), details of which were published this afternoon, Morrisons said it “would be possible for Tesco and the merged entity to compete less fiercely [and] sustain this position for any length of time”.
The grocer also suggested the creation of a “duopoly” could allow the enlarged Sainsbury’s-Asda and Tesco to “increase their delivery charges in order to make their businesses more profitable” due to the “lack of competition” it would create in some parts of the UK.
In a separate meeting with the CMA, which is carrying out of an in-depth investigation into the impact of the proposed deal, Tesco argued the combination would be “a challenge in terms of economics” because there are “few direct customer benefits”.
Sainsbury’s and Asda have insisted that the deal would allow them to slash prices on staple grocery items by 10%, driven by its increased buying power.
But Tesco argued the merger “does not appear to give rise to volume opportunity because suppliers are already supplying both merging parties”.
Tesco added that “without any growth opportunity or efficiencies to offer, branded suppliers will not be interested in reducing their prices”.
Sainsbury’s and Asda have said the merger will “unlock significant cost savings, a large proportion of which will be passed directly on to customers through lower prices”.