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UK supermarket merger facing in-depth probe

© AFP/File | Sainsbury's and Asda are the UK's second and third biggest supermarket chains

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.

© 2018 AFP