Sainsbury's takeover of Home Retail to be probed

Argos store Image copyright PA

The competition watchdog will examine Sainsbury's takeover of Argos owner Home Retail Group.

The Competition and Markets Authority will determine whether the merger could result in "a substantial lessening of competition" for consumers.

The CMA decision has surprised some analysts.

Richard Perks, retail director at Mintel, said the watchdog had every right to examine the deal, but he described the move as "rather odd".

Although the supermarket planned to close dozens of Argos stores and relocate them in Sainsbury's outlets, he said that almost half of Argos sales were now online. That made it difficult to see how the deal would reduce competition for consumers, Mr Perks said.

A Sainsbury's spokesperson said: "The combination of both businesses will create a multi-product, multi-channel proposition with fast delivery networks, benefiting customers by accelerating our strategy to give them what they want, where and when they want it. We look forward to the successful completion of the deal."

The CMA will accept responses until 13 June and should make a decision by 25 July.

The watchdog is also investigating German drugs distributor Celesio's £125m acquisition of Sainsbury's pharmacy business, with a decision expected on 8 August.

The supermarket made a £1.4bn bid for Home Retail Group in March that aimed to "future-proof" its business.

Shares in Sainsbury's closed up 0.6% at 269.3p on Friday.

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