Concerns raised in the initial investigation included the impact of increased buying power on suppliers.
ASDA and Sainsbury’s proposed merger will be subject to an in-depth investigation, the Competition and Markets Authority (CMA) has announced.
An initial investigation raised concerns over the overlap of stores in local areas, where shoppers could face higher prices and a worse quality of service alongside concerns increased ‘buyer power’ could hit suppliers.
The CMA confirmed the deal raised sufficient concerns to be referred for a more in-depth review.
CMA said 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.
Other concerns included those relating to fuel, general merchandise such as clothing and increased ‘buyer power’ over suppliers.
The Phase 2 investigation is a more in-depth review, led by an inquiry group chosen from the CMA’s independent panel members.
Reacting to this, Federation of Small Businessess (FSB) National Chairman Mike Cherry said: “We welcome this step from the CMA, who have identified the dangers that this merger could pose to suppliers.
“It is vital that the executives at the very top of the two supermarkets can explain how the merger can take place without giving the merged chain increased buyer power over suppliers which would negatively impact the smaller firms in their supply chains.
“We would hope that this investigation by the CMA will be able to produce cast-iron guarantees that there will be a positive relationship with small suppliers.”