Competition watchdog fires starting gun on probe of Sainsbury's $29 billion Asda merger

The Competition and Markets Authority will look into the Sainsbury's-Asda planned tie-up. Photo / AP

The competition watchdog has confirmed it is looking into Sainsbury's planned £15 billion ($29.2b) merger with Asda with an invitation for suppliers, customers and other interested parties to comment on whether they think the deal will harm competition.

The Competition and Markets Authority said it would be looking into whether the planned tie-up was "likely to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services".

The CMA's enquiries are expected to focus on areas where the chains have stores in close proximity to each other, and could result in them being forced to sell some shops in order to win its approval, according to the Daily Telegraph.

The move is unlikely to come as a surprise for Sainsbury's and Asda, given the size of their combined market shares and the politically sensitive nature of the deal.

Asda and Sainsbury's control 26.3 per cent of Britain's grocery market, according to figures from Kantar Worldpanel, ahead of current market leader Tesco's 24.6 per cent.

Yesterday it emerged that Greg Clark, the business secretary, had written to the CMA urging it to look at the implications of the deal for suppliers as well as consumers.

Complaints over supermarkets' treatment of farmers and food manufacturers have gained much attention in recent years, leading to the creation of a new watchdog, the Groceries Code Adjudicator in 2013.