Time for Sainsbury’s to up its game as CMA blocks giant merger with Asda

To nobody’s great surprise the UK’s Competition and Markets Authority (CMA) has blocked the attempted £7bn merger of Sainsbury’s and Walmart-owned Asda, saying: “It’s our responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week. Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers.”

Which means that Sainsbury’s CEO Mike Coupe (below) won’t be “in the money,” which he was spotted singing while waiting for a TV interview about the mooted deal. He’ll be spitting feathers after seeing Tesco boss Dave Lewis evade a similar sanction in his massive deal for wholesaler Booker.

Coupe, or his shareholders, may decide his time’s up as Sainsbury’s has flatlined at best as traditional rivals Tesco, Morrisons and even Asda have responded with more energy to the threat of German discounters Aldi and Lidl. Sainsbury’s bigger stores are a sad sight since some genius decided not to stock the shelves overnight, meaning that on a busy morning there’s nothing to buy.

Sainsbury’s has benefitted from some perky advertising from Wieden+Kennedy under the Coupe regime but there’s only so much advertising can do, as W+K found when it handled Tesco under the disastrous reign of former CEO Phil Clarke.

The CMA decision leaves Asda up in the air too. Owner Walmart is preoccupied with its battle with Amazon in the US and, although Asda has improved recently, fighting off Aldi and Lidl requires a heavy investment it may not be prepared to make.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.