The proposed merger of Sainsbury’s and Asda puts too much power in the hands of large retailers and will have a damaging impact on the environment, regulators have been warned.
Food campaigners, environmentalists and farmers’ leaders are claiming the proposed deal, and the accompanying promise to further drive down prices, will put more pressure on producers, many of which may be forced to cut corners on environmental safeguards and shelve green initiatives.
Sainsbury’s-Asda merger could lead to ‘monopoly’ towns in UK
It comes as farmers face calls from the environment secretary, Michael Gove, to become stewards of the countryside, with any post-Brexit subsidy system focused on farmers contributing to a healthy and diverse environment.
Dan Crossley of the Food Ethics Council said it was impossible to maintain pressure on farmers without having a negative long-term impact on the environment.
“Too much pressure on producers only increases the risk of shortcuts being taken, including environmental standards being lowered,” he said.
“It also reduces the likelihood of producers being able to make important long-term investments to drive environmental improvements, like investing in renewable energy on farms.”
The National Farmers’ Union said the environmental impact of the merger was one of its concerns.
“The NFU will be examining the details of this proposed merger between Sainsbury’s and Asda carefully and the further concentration of retail power it creates within the food supply chain … The impact of the whole supply chain, all the way down to farm level, needs to be carefully assessed,” said the NFU president, Minette Batters.
Clare Oxborrow, a senior food and farming campaigner at Friends of the Earth, said the merger could mean that two businesses – Tesco and a combined Sainsbury’s/Asda – account for 60% of the grocery market.
“The lure of lower food prices, particularly for shoppers on a budget, can seem attractive, but it hides the unpalatable truth that farmers will be under increased pressure to produce more but for less,” she said.
Oxborrow warned that if retailers demand “ever-tighter margins, something’s got to give and the environment must not end up paying the price”.
“Rather than a deal of behemoths, we need diversity in our farms and high streets, with fairness across the supply chain,” she said.
Asda and Sainsbury’s said both brand names would be retained and there were no plans for store closures as a result of creating the group that would overtake Tesco to become the UK’s largest retailer.
Sainsbury’s chief executive, Mike Coupe, said customers could expect a 10% reduction in the cost of popular foods.
The Competition and Markets Authority has said it is likely to review Sainsbury’s deal with Asda, but has declined to comment in advance of an inquiry opening.
In the next few weeks, the regulator is expected to announce whether it will carry out a broad-brush “phase 1” review, which would last up to 40 days, or go straight to a more detailed “phase 2”, in which it would examine competition concerns at a local level around the UK in a process lasting up to 24 weeks.
Campaigners say the environmental impact of the proposed merger and the wider concentration of power in the food retail sector should be considered.
Crossley said: “There’s no such thing as a free lunch when it comes to promised price reductions.
“Cheaper prices for customers are likely to be unaffordable for farmers, suppliers, farm animals and for the environment. At a time when we need to face up to climatic shocks and resource scarcity, we need a resilient food system – and the best route to resilience is diversity.”