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Author Topic: Sainsbury's-Asda merger.  (Read 1459 times)
RED-DOG
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« on: February 21, 2019, 11:59:53 AM »

Why would it be blocked?

Surely market forces would prevail and if the public were disadvantaged they could just vote with their feet and shop at Tesco/Morrisons/Co-op/Lidl/Aldi ect.

It's not as if they have a monopoly is it?

Why is this different than any other merger?
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tikay
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« Reply #1 on: February 21, 2019, 12:27:43 PM »


It's what happens when the Government - in this case via the CMA - meddle in business.

And it's also exactly why our rail system is such a mess. If you look at how the private & nationalised parts of the railway interact it's a complete & utter clusterfuck.
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« Reply #2 on: February 21, 2019, 12:34:00 PM »

Surely though, if the CMA are going to mess about with the business decisions of huge companies they have to prove that they have an airtight reason for doing so?
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« Reply #3 on: February 21, 2019, 12:38:58 PM »

Surely though, if the CMA are going to mess about with the business decisions of huge companies they have to prove that they have an airtight reason for doing so?

Well they have a remit to prevent "anti-competitive" behaviour (aka monopolys).

This will make your eyes glaze over, but here's how the Government justify it;


https://www.gov.uk/government/collections/how-the-cma-investigates-competition-and-consumer-issues


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« Reply #4 on: February 21, 2019, 01:03:29 PM »

According to this:
https://www.kantarworldpanel.com/en/grocery-market-share/great-britain

combined they will have a 31.2% share of the UK grocery business. Seems reasonable to stick your nose into if you were me.

Where I live, my two biggest nearest supermarkets are a Sainsbury and an Asda, so if you gave me the choice I'd rather they stayed separate. But I'm not really that bothered.
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« Reply #5 on: February 21, 2019, 01:04:38 PM »

Why would it be blocked?

Surely market forces would prevail and if the public were disadvantaged they could just vote with their feet and shop at Tesco/Morrisons/Co-op/Lidl/Aldi ect.

It's not as if they have a monopoly is it?

Why is this different than any other merger?


Because they will have a third of the market, and tesco will have another third, so between them they can act as a duoploy; they can certainly behave like a monopoly in some areas.  You may be able to choose but some old biddy in a small town without a car may not.  You can see what happens with local monopolies by observing petrol prices that Morrisons charge in different locations.

It is clearly nothing like the way the railways are run which has several local monopoloies, hence you can't choose between scotrail and southeastern.
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« Reply #6 on: February 21, 2019, 01:12:45 PM »

According to this:
https://www.kantarworldpanel.com/en/grocery-market-share/great-britain

combined they will have a 31.2% share of the UK grocery business. Seems reasonable to stick your nose into if you were me.

Where I live, my two biggest nearest supermarkets are a Sainsbury and an Asda, so if you gave me the choice I'd rather they stayed separate. But I'm not really that bothered.


This is what the problem is - in many localities they will have a monopoly.

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« Reply #7 on: February 21, 2019, 01:58:59 PM »

The monopolies aren't a problem. I can't think of an example where companies start exploiting their customers. When a supermarket sends independent retailers under its because they offer more choices e and lower prices. When the independents go under we don't see supermarkets scaling back choice and ramping up prices

And where their monopoly does see them stagnate we see innovative alternatives like Aldi move in and hoover up market share.

Government should stay the hell out of this


A lot of the more complicated monopoly cases often take years and by the time they are close to ending the so called collosous has been out flanked by more nimble competition.

Think of the strangle hold that the likes of dell, nokia, EMI etc had over their respective industries before being blind sided by things like MP3 players and smart phones
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« Reply #8 on: February 21, 2019, 02:47:04 PM »

The monopolies aren't a problem. I can't think of an example where companies start exploiting their customers. When a supermarket sends independent retailers under its because they offer more choices e and lower prices. When the independents go under we don't see supermarkets scaling back choice and ramping up prices


https://www.google.co.uk/search?q=predatory+pricing+uk+supermarket

Seems to be a few examples of exactly those behaviours.
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Pokerpops
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« Reply #9 on: February 21, 2019, 03:43:59 PM »

It’s not just customers who can be exploited by this situation. Suppliers will also be squeezed on price and payment terms.
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« Reply #10 on: February 21, 2019, 05:45:20 PM »

The monopolies aren't a problem. I can't think of an example where companies start exploiting their customers. When a supermarket sends independent retailers under its because they offer more choices e and lower prices. When the independents go under we don't see supermarkets scaling back choice and ramping up prices


https://www.google.co.uk/search?q=predatory+pricing+uk+supermarket

Seems to be a few examples of exactly those behaviours.

Customers being exploited by 40% discounts and more choice, staff being exploited with higher pay and career progression.

The suppliers are squeezed down to where their price is close to the marginal cost. But consumers benefit from this.

And whilst this giant monolithic entity was squeezing out all competition in 2004 by 2014 it had lost a significant market share to Aldi and Lidl who set up their own supply chains and out manouvered the supposedly unstoppable monopoly, all without  government intervention.
« Last Edit: February 21, 2019, 05:47:33 PM by teddybloat » Logged
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« Reply #11 on: February 21, 2019, 08:51:05 PM »

As long as it keeps the riffraff out of Waitrose they can merge all the like.
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« Reply #12 on: February 21, 2019, 09:01:18 PM »

As long as it keeps the riffraff out of Waitrose they can merge all the like.

lol
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« Reply #13 on: February 21, 2019, 11:42:04 PM »

Poor business and lack of foresight by Asda/Sainsbury imo.
It was pretty obv when the proposed merger was first published that the Govt/monopolies commission were going to be all over it. They must know the rules around it.
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Longines
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« Reply #14 on: February 21, 2019, 11:46:12 PM »

The monopolies aren't a problem. I can't think of an example where companies start exploiting their customers. When a supermarket sends independent retailers under its because they offer more choices e and lower prices. When the independents go under we don't see supermarkets scaling back choice and ramping up prices


https://www.google.co.uk/search?q=predatory+pricing+uk+supermarket

Seems to be a few examples of exactly those behaviours.

Customers being exploited by 40% discounts and more choice, staff being exploited with higher pay and career progression.

The suppliers are squeezed down to where their price is close to the marginal cost. But consumers benefit from this.

And whilst this giant monolithic entity was squeezing out all competition in 2004 by 2014 it had lost a significant market share to Aldi and Lidl who set up their own supply chains and out manouvered the supposedly unstoppable monopoly, all without  government intervention.

Terry Leahy's love child?
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