BENTONVILLE, Ark. – UK-based Asda, a unit of Walmart Inc., terminated a proposed merger with Sainsbury’s after the UK Competition Markets Authority (CMA) blocked the transaction.

In its final report, the CMA determined that approving the merger would lead to less competition at the national and local level for supermarket shoppers. The report also stated that the merger “…would result in increased prices and reduced quality of service, such as fewer delivery options, when shopping online. Furthermore, it would lead to motorists paying more at over 125 locations where Sainsbury’s and Asda petrol stations are located close together.”

Stuart McIntosh, chair of a group of independent CMA panel members, said, “It’s our responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week. Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers.

“We have concluded that there is no effective way of addressing our concerns, other than to block the merger.”

Walmart disagreed with the CMA’s findings, but said Asda, Walmart and Sainsbury’s mutually agreed to terminate the transaction.

“We have been clear from the beginning of the proposed merger about two things,” said Judith McKenna, CEO of Walmart International. “Firstly, that retail is rapidly changing and standing still is not an option, and secondly that we will always ensure our international markets are strong local businesses powered by Walmart.”

McKenna added that the UK remains the most competitive retail market in the world. The merger with Sainsbury’s would have further strengthened Asda’s position in the market while delivering clear benefits to consumers, she said.

“While we’re disappointed by the CMA’s final report and conclusions, our focus now is continuing to position Asda as a strong UK retailer delivering for customers,” McKenna added. “Walmart will ensure Asda has the resources it needs to achieve that.”

The CMA is an independent non-ministerial government department tasked with investigating mergers, markets and regulated industries and enforcing competition and consumer law. The decision to block the Asda-Sainsbury’s merger was based on a number of issues, including increased competition from discount stores such as Lidle and Aldi and the impact of new or expanding competitors on the retail market and e-commerce. “Whilst the panel carefully considered these industry developments,” the CMA report stated, “they did not allay its serious competition concerns about the merger.”

And despite the retailers’ statement about cutting some prices, a detailed analysis showed that, overall, the merger would reduce competition and price increases would more than offset price cuts.

“Asda’s DNA is delivering low prices for hard working families and that will never change,” said Roger Burnley, CEO of Asda. “We were right to explore the potential merger with Sainsbury’s, which would have delivered great benefits for customers and supported the long term, sustainable success of our business.

“We’re disappointed with their findings but will continue to find ways to put money back into customer’s pockets and deliver great quality and service in an ever changing and demanding market,” he added. “I have always been hugely aware that the last year has been an unsettling time for all of our colleagues and am immensely grateful for their commitment and dedication during that time. Our focus is now on the most important job we all have — delivering for our customers.”

Additional details about the CMA’s investigation are available on the Sainsbury’s/Asda case page.