Sainsbury's-Morrisons Merger Talks Collapse Before CMA Review

Merger talks between Sainsbury's and Morrisons have been abandoned, raising questions about whether the combination ever made strategic sense for the UK's second-largest supermarket chain. The two companies are believed to have judged that Britain's Competition and Markets Authority would have approved the transaction before initiating — and then halting — discussions.

The regulatory case for approval had some foundation. Sainsbury's holds a 15.2% market share, according to Worldpanel analysts, while Morrisons accounts for 8.4%. Combined, the merged entity would still trail Tesco, which commands 27.8% of the market — meaning the deal would not have vaulted Sainsbury's past the dominant market leader.

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That distinction matters in antitrust analysis. Regulators typically apply greater scrutiny when a merger would create a new market leader, as opposed to consolidating a second-place challenger that still faces a formidable rival at the top. The dynamic is notably different from Sainsbury's ill-fated 2018 attempt to acquire Asda, a bid that was explicitly designed to leapfrog Tesco and was ultimately blocked by the CMA.

Even so, a CMA green light is not guaranteed. British regulators have grown more assertive in recent years, and a merger combining the second- and fourth-largest supermarket groups would inevitably draw scrutiny over local market concentration, supplier pricing power, and consumer choice — particularly for shoppers in areas where the two chains compete most directly.

The deeper question left unanswered by the collapse of talks is whether Morrisons represented a must-have acquisition for Sainsbury's at all, or whether the strategic rationale was always thinner than the regulatory arithmetic suggested. Continue reading at Business | The Guardian.