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Report: Sainsbury's claims CMA made errors in assessing Asda merger

Supermarket chain J Sainsbury PLC is arguing that the U.K.'s competition watchdog made miscalculations in analyzing its merger with Walmart Inc.-owned Asda Stores Ltd., Bloomberg News reported March 14, citing people familiar with the situation.

The news comes about three weeks after the Competition and Markets Authority, or CMA, notified the companies that it may reject their merger. In its provisional findings, the CMA said the agreement would be harmful to shoppers and would result in "higher prices, a poorer shopping experience, and reductions in the range and quality of products offered."

The CMA, at the time, added that it would be "likely to difficult" for Sainsbury's and Asda to address the concerns that the antitrust regulator highlighted.

Most recently, Sainsbury's claimed that the regulator made errors in its analysis of the retailer's store networks, according to the report. Citing calculations made by Sainsbury's, sources told Bloomberg that the CMA's analysis would mean that neither of the two retailers could locate an outlet within 7 minutes' drive of the other.

Sainsbury's also reportedly questioned the timing of Marks and Spencer Group PLC's online grocery deal with Ocado Group PLC. The supermarket chain said M&S misled the CMA about the pending Ocado deal that changes the competitive landscape in the supermarket industry, sources told the newswire.

The legal team of Sainsbury's reportedly argued that the watchdog did not sufficiently interrogate the chain's rivals after M&S told them it had no definitive plans to foray into online grocery deliveries, the report said.

A week after the CMA's provisional findings on the Sainsbury's-Asda deal were released, M&S confirmed that it is in the process of forming a 50/50 joint venture, valued at £1.5 billion, with Ocado.

Lawyers also argued that the regulator incorrectly counted some of Asda's stores, according to the report. Sainsbury's and Asda also reportedly said the CMA may have incurred a coding error in its analysis that more than doubled the number of gas stations that may compete with the combined entity.

The news outlet said a spokeswoman for Sainsbury's declined to comment, while a spokeswoman for M&S declined to comment, saying "this is a matter for Sainsbury and the CMA."