Skip to main contentSkip to navigationSkip to navigation
‘We are not children, you can’t just come in here and give us a nursery rhyme,’ Neil Parish said.
‘We are not children, you can’t just come in here and give us a nursery rhyme,’ Neil Parish said. Photograph: Paul Faith/PA Archive/Press Association Ima
‘We are not children, you can’t just come in here and give us a nursery rhyme,’ Neil Parish said. Photograph: Paul Faith/PA Archive/Press Association Ima

MPs tell Asda and Sainsbury's merger was 'financial fix'

This article is more than 5 years old

Asda and Sainsbury’s bosses accused of giving ‘mickey mouse numbers’ to parliamentary committee

The bosses of Asda and Sainsbury’s have been accused of using “mickey mouse numbers” by MPs, who also dismissed the two grocers’ promise to continue running both brands separately after a merger as “baloney”.

In a bruising session on Wednesday morning, Neil Parish, chair of the parliamentary environment food and rural affairs committee, told Asda’s chief executive Roger Burnley there was “no logic to this deal other than a financial fix for both of you”.

“We are not children, you can’t just come in here and give us a nursery rhyme,” Parish said.

He questioned the two companies’ estimate that they together accounted for 25% of the grocery market. The two grocers’ calculations include rivals such as Marks & Spencer and B&M Bargains, whereas data which only includes the main grocery chains suggests that Sainsbury’s and Asda together account for more than 30% of the market.

Burnley said Asda and Sainsbury’s would continue to operate as “two separate brands doing the right things for our customer base”. He insisted that promised price cuts of 10% – on what he eventually admitted would be only a range of “every day essentials” – would not be gained by forcing price cuts on suppliers. He said savings made across the business would be invested in the most competitive product areas.

Burnley and Mike Coupe, the chief executive of Sainsbury’s, both said their plan was to focus on getting better terms from large suppliers by ensuring that the combined group paid the lower price if they were currently on different terms. They said those major suppliers would benefit from supplying one organisation rather than two and shoppers would get cheaper prices on items such as toilet rolls, detergent, tinned tomatoes and milk.

They insisted that smaller suppliers, who account for only a small proportion of the retailers’ turnover, would not be affected.

Parish said the two companies would only be able to make savings and pass on promised price cuts for shoppers by cutting prices to all suppliers.

“Asda and you are playing us for fools. Money has to be saved somewhere,” he said.

Parish suggested they were likely to adopt Asda’s way of operating, buying less from British farmers, and accused them of trying to cover up their true plans. He said the companies were also likely to reduce staff at head office further down the line.

“You are going to run two separate things?… it’s unbelievable,” he said. “This is baloney … Six months or even a year further down the road it is going to be one system.”

Burnley said: “There is a mood of optimism among suppliers. This is about a step change in our ability to offer customers what they want, better value and better prices.”

Parish insisted most suppliers were “terrified” and it had been “a huge problem to get anyone to say anything” about the deal because of that.

He also questioned whether large suppliers would agree to the new terms Asda and Sainsbury’s wanted. “It is not believable that big suppliers are all going to bow down … No they are not, because they are bigger than you,” he said.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Even if major suppliers do agree to lower prices he suggested they might fund this by putting pressure on smaller suppliers down the chain.

Coupe denied the “implication that we are going to work everybody back to the lowest common denominator”.

“I will be group chief executive of this company. I’m very proud of my track record over decades in this industry raising standards well beyond anything you see in the world and [at the] leading edge of many things we do in the UK,” he said.

He also said standards would not slip at Sainsbury’s following the merger.

“If we do something that disenfranchises [shoppers] they will not shop with us,” he said.

More on this story

More on this story

  • Walmart in talks to sell majority stake in Asda

  • Up to 12,000 Asda workers could lose jobs amid contract row

  • Asda workers stage protests against 'punitive' new contract

  • Walmart 'seriously considering' Asda stock market flotation

  • Asda staff could end up £500 worse off under wage changes, says MP

  • Sainsbury's was naive to pursue Asda but its CEO deserves to stay on

  • Sainsbury's boss defiant despite £46m cost of failed Asda merger

  • Failed merger leaves Sainsbury's investors fearing there is no plan B

  • Sainsbury's-Asda merger blocked by competition watchdog

Most viewed

Most viewed