Sainsbury’s and Asda have
lodged an application with the Competition Appeal Tribunal for a Judicial
Review of the Competition and Markets Authority (CMA) Phase Two investigation
into their proposed merger.
The application seeks to
review the timetable for the CMA’s investigation after the regulator refused
the two supermarkets longer to respond to evidence about their proposed £7.3
In a statement J Sainsbury
plc said, ‘The current timetable does not give the Parties or the CMA sufficient
time to provide and consider all the evidence given the unprecedented scale and
complexity of the case. Both Parties have engaged constructively with the CMA
to date and have made repeated requests for additional time. Specifically, we
have asked the CMA for an additional 11 working days over the Christmas period
to respond to a large amount of material recently provided to us.’
Sainsbury’s shares fell by
up to 5.5 per cent on the news according to Reuters.
In response to the original
request for an additional 11 days to respond over the Christmas period, the CMA
granting an extension would put its ability to complete the investigation by
the required deadline “at very serious risk”. It added, “As with all of our
merger reviews, we construct our timetable to ensure that everyone has the
chance to have their say, including customers, the companies involved and
The Food and Drink
Federation (FDF) is conducting a survey on how the industry feels about the
proposed merger between Sainsbury’s and Asda.
The FDF survey reflects many
of the areas which will be investigated by the phase 2 investigation by the
Competition and Markets Authority (CMA) which begins in December. The FDF
added, ‘We are keen to ensure the views and concerns of UK food and drink
manufacturers of all sizes are heard by the CMA and we invite businesses to
respond to this short survey. This survey is designed to focus on the impact of
the Sainsbury’s / Asda merger on consumers, based on the CMA’s remit to
consider effects on consumers. Furthermore, the CMA have indicated a particular
focus on the effects of the merger on pricing and innovation.’
Despite consistent reassurances by Sainsbury’s chief executive Mike Coupe that there will be no store closures or job losses as a result of the proposed merger between his company and rival supermarket chain Asda, new analysis by The Times suggests that competition watchdogs could demand that as many as 300 stores are sold off if the deal is given the go ahead.
The analysis is said to have used the same modelling techniques which are likely to be employed by the Competition and Markets Authority (CMA) when considering such a deal, and also revealed that at around half of the 300 locations identified, Tesco or Morrisons may not wish to buy one of the former Asda or Sainsbury’s stores.
The news will come as a blow to Sainsbury’s which had already been accused of offering “Mickey Mouse figures” about the merger by MP Neil Parish, chair of the Environment, Food and Rural Affairs Committee.
Last week the CMA confirmed that its formal investigation into the merger has begun. Andrea Coscelli, chief executive of the CMA, said, “We will carry out a thorough investigation to find out if this merger could lead to higher prices or a worse quality of service for shoppers and will not allow it to go ahead unless any concerns we find are fully dealt with.” In May an initial estimate by the BBC suggested that 73 stores may have to be sold to get the deal approved.
According to the Mirror, Asda’s store in Bedminster, Bristol has stopped selling certain loose product lines, including potatoes, carrots and apples.
The online report said that shoppers had attempted to get round the requirement to buy pre-packs by opening them up and taking loose items to the checkout. “It’s not even about the money (although for some it will be) but think of the food waste,” said one customer. “Also think of a poor granny having to carry 1k of carrots and 1k of potatoes home when she’s cooking a stew for one!”
The Daily Mail said that the policy appeared to be nationwide with the Asda stores in Colne and Radcliffe also stopping the sale of loose produce.
Photo Caption: Many people have complained about the lack of loose produce in Asda store on social media.
Albert Bartlett has announced that Asda will be the first UK supermarket to list the newest member of its frozen potato range: Albert Bartlett Rooster Chunky Chips in a 900g pack.
The company launched its frozen range in October last year after buying the former Heinz and Aunt Bessies factory in Westwick in Norfolk. Three product lines: Homestyle chips 1.5kg, Rooster Homestyle chips 900g and Rooster Roast Potatoes 900g are available in Sainsbury’s, Morrison’s and the Co-op. The new Rooster Chunky Chips will be available in Asda from 25 April and the company claims they are one of the biggest cut sizes of any branded chunky chip on the market.
Albert Bartlett’s head of marketing, Michael Jarvis, commented, “We are delighted that the Albert Bartlett frozen range is launching in Asda with the proven Homestyle Chips, Rooster Roasts and the delicious newly developed Chunky Chips. We have quality control in every step of the process, from the growing right through to the preparation and freezing at our own plant in Norfolk.”
Asda boss Andy Clarke has said the company will lead the UK supermarket industry in the long term, despite the firm posting the worst quarterly drop in earnings in its history.
The 5.8 per cent fall in fourth-quarter sales, which included the crucial Christmas trading period, was the sixth straight quarterly decline posted by the retailer and was the worst set of Christmas trading figures from the major UK supermarkets.
Mr Clarke said, “In the long run we’ll win in this market. Market share is important to us … But what’s more important is financial control and stability. That’s going to give us an advantage to win in this market.” The company has said it will invest £1 billion to help price cuts, but has recently been reported as requesting help from suppliers.
An unnamed source told the Guardian that suppliers had been asked for “significant amounts of money”, adding, “Individual suppliers are being asked for millions of pounds and asked what they want in return.”
However, the retailer said it wanted to work collaboratively and wasn’t asking suppliers to hit a particular price point. It also said it was working with Groceries Code Adjudicator Christine Tacon to ensure it complied fully with the code.
Retailer Asda has attempted to map the risks of climate change and, according to chief executive Andy Clarke it is one of the biggest issues facing the industry.
The BBC reports that the supermarket giant estimates that as much as 95 per cent of its fresh produce supplies could be affected by rising global temperatures, principally by reduced water availability. Both UK and imported produce could be affected with a resulting increase in prices.
“Climate change is a big industry and a big global issue, and we’ve been working hard to understand them so we can try to get ahead,” Mr Clarke told the BBC. “”We’ve seen, over the course of the last decade, rising temperatures across the world.” The company is working with growers in Spain and the UK to mitigate some of the effects of climate change.
The first crop of UK-grown sweet potatoes has been harvested for supermarket Asda by Watts Farms at Hill Farm in Farningham, Kent.
Joe Cottingham, Watts Farms’ group director told The Guardian, “We have been successful in growing sweet potatoes outdoors in Kent because of careful variety trial work and selection for frost resistance, which the crop is susceptible to,” Cottingham explained. “They are grown in light soils through a mulch which allows us to get warmer soil temperatures which produce good-sized potatoes. We give the potatoes all the water they need through drippers underneath the mulch which takes them from small plants to much larger plants bearing fruit in five months.”
The company grows and packs more than 60 types of produce, including herbs and chillies, from 10 farms in Bedfordshire, Northamptonshire, Kent and Essex. “Sweet potatoes have been a challenge but we have finally got there after experimenting with a number of different varieties,” added Cottingham.
A white Caribbean sweet potato was rejected as “too sweet” before the company focused its efforts on a hardy red-skinned, orange-fleshed variety. “We are hugely proud to be delivering this UK first… Sweet potatoes are now a UK dinner table favourite, and these taste and look exactly the same as those grown overseas, so to have them from home soil is a great feat for us!” he concluded.
Asda’s chief executive Andy Clarke has warned that supermarket trading conditions will remain tough for the foreseeable future, indicating that the retailer will continue to focus on low prices to gain market share.
In the last few days Mr Clarke has spoken to a number of press outlets as the supermarket said it would ‘invest’ £300 million during the first quarter of 2015 on reducing prices across its range, particularly ‘weekly essentials and big brands.’ In a press release the company cited cucumbers and russet apples among those products that would be ‘rolled back’ until the end of March. Asda has been criticised by the NFU for cutting milk and egg prices over the last week.
Speaking on BBC 5 Live last week, Clarke admitted that the rise of discounters, such as Lidl and Aldi, who together now account 8.6 per cent of the UK grocery market, were having a real effect on the ‘Big Four’ of Tesco, Asda, Sainsbury’s and Morrison’s. “The level of profitability decline in some retailers over the course of 2014 – we’ve never seen it before,” he said. “It suggests 2015 is going to be equally as challenging.”
Before Christmas Clarke told The Telegraph that Asda, which is owned by Wal-Mart, was about a year ahead of its rivals in terms of facing up to a marketplace dominated by lower prices and bigger discounts: “I have got a very simple view, which is get your prices to be the best in the market. We know we have got more work to do against the discounters, but in some categories we have got parity already. We have halved the price gap over the last two years; we have narrowed it further in the last year.
“Our ambition is to keep narrowing the price gap to the discounters and widening the price gap to the big grocers. We firmly believe customers are getting bored with gimmicks. They want transparency and they want clarity of basket pricing.”
In November accountancy firm Moore Stephens warned that the number of food production businesses which became insolvent in 2014 was 23 per cent higher than the previous year and that the trend could continue if supermarkets launched a full scale price war.