Future of Work

MPs have accused the heads of Asda and Sainsbury’s of talking “baloney” about the impact of their merger.

Neil Parish, chair of the Environment, Food and Rural Affairs Committee, said small suppliers would suffer from their pledge to cut 10% off the price of “everyday” items after they merge.

Asda chief executive Roger Burnley and Sainsbury’s Mike Coupe were giving evidence. Asda and Sainsbury’s announced £15bn merger plans in April.

“You can’t have a 10% saving without someone paying for it,” Mr Parish said.

Both Mr Burnley and Mr Coupe said that small suppliers would not be hurt by their attempt to cut the price of every day items such as milk, bread and tinned tomatoes.

“I can categorically say that the synergy benefits on which the combination is predicated are not based on making 10% savings from individual suppliers as you’re saying,” Mr Burnley said.

Mr Parish questioned the assertions by the two supermarkets that the enlarged business – which will have 300,000 staff and 2,800 stores – would have a 25% market share, rather than 30%.

MPs on the committee also questioned whether the two brands would remain separate, as the companies have announced, after the deal takes place next year.

‘Mickey Mouse’ figures

“We’re not children, you can’t just come in here and give us a nursery rhyme,” said Mr Parish.

“We’ve being having lots of Mickey Mouse figures this morning,” he said.

Savings on everyday products could come from larger suppliers, Mr Coupe told MPs, not from smaller ones.

Mr Coupe gave the example of cereal company Weetabix, which is owned by US company Post. “Weetabix make 20p in the pound profit and we don’t think it’s an unreasonable question to ask Weetabix to take the buying price that’s currently paid by Sainsbury’s or Asda and make it the same for both companies.”

That saving would be passed on to consumers, Mr Coupe said.

Mr Parish further questioned whether the enlarged company would have such clout with major companies, citing the example of the largest chain, Tesco.

“It is not believable that it is only the big suppliers,” he said. “They are bigger than you, and they are bigger than your combined operations.”

Mr Coupe said suppliers had told him that they saw benefits of dealing with a company like Sainsbury’s.

He told MPs that his pay was not linked to the deal taking place. He has already apologised for being caught on camera singing “We’re in the money” while waiting to be interviewed for ITV News on the day the deal was announced.

The deal is subject to scrutiny by the Competition and Markets Authority and Mr Coupe said it was possible that the regulator could require stores to be closed. He was not specific about how many stores overlapped. The BBC has reported that up to 73 stores could have to be sold.

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