UK supermarkets pledge price cuts amid merger doubts
British supermarket giant Sainsbury's and Walmart-owned Asda on Tuesday vowed to slash prices to overcome regulatory concerns and secure a blockbuster merger.
The Competition and Markets Authority watchdog last month warned that the planned merger raised "extensive competition concerns" and could spark higher prices and less choice.
The warning, contained in early findings of the CMA's in-depth probe, has sparked heavy criticism from the two supermarket firms, particularly over the level of competition in the sector.
"Sainsbury's and Asda strongly disagree with the CMA's provisional findings," the pair said in a statement on Tuesday, adding that the regulator's initial verdict contained "significant" economic and legal errors.
"The two businesses are proposing to merge so that they can lower prices for customers in an increasingly competitive market, while improving quality and service."
They vowed "to deliver £1.0 billion of lower prices annually by the third year post-completion", in a move that they said would lower consumer prices by ten percent on everyday items.
The price-slashing investment will be funded by an estimated £1.6 billion in cost savings.
Sainsbury's and Asda, the nation's second and third biggest supermarket chains respectively, unveiled merger plans in April 2018 to create a retail king that would leapfrog UK number one Tesco.
Long-established UK retailers are battling sliding consumer sentiment and Brexit uncertainty alongside a broader economic slowdown.
They also face fierce competition from online US titan Amazon -- as well as German-owned discounters Aldi and Lidl.
? 2019 AFP