Former Asda exec slams Sainsbury's merger and says deal should be stopped

Ex-Asda board member said CMA should block the supermarkets from combining

A former Asda executive has slammed the supermarket’s proposed merger with Sainsbury’s, and said the competition watchdog should block the deal.

John Maltman, who was business development director at Asda in 2004 and 2005, said the companies were treating people “as fools” by stating there will be no store closures as a result of the tie-up.

“This is a cost play which will impact jobs in warehousing, distribution, stores, headquarters and suppliers,” he said.

“It is a great pity that the management of two big corporations cannot come up with a better and more constructive idea than a merger. In my view, putting two low growth businesses together doesn’t create a high growth business.”

Mr Maltman, who is now CEO of E Fundamentals, said that it “should take the competition authorities a short time to kick this into touch”.

The two firms have opted to be fast-tracked into a phase 2 investigation by the Competition and Markets Authority, although many analysts have predicted the deal will get the green light based on the CMA's approach to Tesco's acquisition of Booker.

“It wasn’t so long ago that retailer margins in the UK were amongst the highest in the world,” he said, adding that competitive pressure from outside the top four supermarkets, such as online players like Amazon and discounters such as Aldi and Lidl, had brought them down

“Creating a duopoly with anything like 60 per cent of grocery sales and expecting it to work for customers is wishful thinking. Unfortunately, the “we let the Tesco/Booker merger happen, so we cannot stop this” argument may prevail,” according to Mr Maltman.

He also warned that Sainsbury’s and Asda should both be considered acquisition targets, meaning management of both businesses “should get on with creating real growth”.