The planned tie-up between grocery giants Sainsbury’s and Asda would be bad news for consumers, a supplier has told the Competition and Markets Authority.

The supplier, named as ‘supplier B’ by the CMA to preserve its anonymity, said the deal would be “extremely detrimental” to shoppers.

The supplier wrote: “The proposed merger will create the largest grocery retailer in the UK, ahead of Tesco and together the parties and Tesco will benefit from a duopoly with estimated segment shares of 80% of the major multiple segment, 60% of the total grocery segment and 70% of the online grocery segment.

“This will have significant negative implications and raise material competition issues at all levels of the supply and distribution chain, which ultimately will be will be extremely detrimental for consumer welfare.

“The damaging effects of the proposed merger will be long lasting and unlikely to be counterbalanced by any market developments (such as expansion of existing actors or new entry) or regulatory frameworks (such as the Groceries Supply Code of Practice or existing competition law legislation).

“Unlike previous retail mergers, the proposed merger will cause a fundamental change to the structure of the grocery sector to the detriment of consumers.”

It argued that discounters Aldi and Lidl would not “exert any direct meaningful competitive constraint on the parties” and any store disposals ordered if the deal goes ahead would not “resolve the issue of lack of direct alternatives to the parties”.

The CMA is is expected to issue provisional findings on the Sainsbury’s-Asda deal early next year.