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UK supermarket merger facing in-depth probe

Sainsbury's and Asda are the UK's second and third biggest supermarket chains
Sainsbury's and Asda are the UK's second and third biggest supermarket chains Sainsbury's and Asda are the UK's second and third biggest supermarket chains AFP/File
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London (AFP)

The mega-merger of British supermarket giant Sainsbury's and Walmart-owned Asda will face an in-depth competition probe, regulators said Wednesday.

The Competition and Markets Authority (CMA) announced in a statement that it will investigate the blockbuster deal, which is effectively a takeover bid with Sainsbury's acquiring a 58-percent stake in the combined group and Walmart the rest.

Sainsbury's and Asda, the nation's second and third biggest supermarket chains respectively, had unveiled merger plans in April to create a retail king that would leapfrog UK number one Tesco.

The CMA had launched an initial or Phase One probe in August, but will now carry out a Phase Two or in-depth investigation after concluding that the deal poses concerns.

"The deal raises sufficient concerns to be referred for a more in-depth review," the regulator said in a statement.

"The companies are two of the largest grocery retailers in the UK and their stores overlap in hundreds of local areas, where shoppers could face higher prices or a worse quality of service."

The probe will also consider issues relating to the sale of motor fuel, general merchandise such as clothing, and increased buying power over suppliers.

The mega-merger comes as long-established UK supermarkets battle fierce competition from online US titan Amazon, as well as discounters like German-owned groups Aldi and Lidl.

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