Sainsbury’s and Asda could be forced to sell hundreds of stores to appease the competition watchdog ahead of their planned merger.
The Competition and Markets Authority said it had found a “realistic prospect of a significant lessening of competition” in 463 areas where the retailers' catchment areas overlap.
The findings came from the CMA’s phase one investigation into the proposed £12 billion merger, taking into account competition with rival retailers including Tesco and Morrisons, but not Aldi and Lidl.
The second phase of the investigation was launched last week, and Sainsbury’s and Asda called on the CMA to include the discounters in its assessment of risk to competition.
A spokesperson for the two supermarket chains said: “The grocery market has changed significantly in the last decade and is more competitive than ever, with the rise of discount formats, online grocery and food delivery businesses.
“We look forward to working with the CMA on the phase two inquiry, where we expect it to conduct a full review of the market and take these changed market dynamics into consideration.
“Customers will be the big winners from this combination. By bringing the two businesses together, we will be able to invest further in more convenient ways of shopping while lowering prices and reducing the cost of living for millions of UK households.”
If the deal goes ahead, it would see Sainsbury’s and Asda leapfrog Tesco to become the UK’s largest grocery retailer.
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