Sainsbury and Asda Merger

– in the House of Commons at 3:36 pm on 30th April 2018.

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Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee 3:36 pm, 30th April 2018

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on the proposed merger of Sainsbury’s and Asda.

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

On 30 April, J Sainsbury plc and Walmart Inc. announced that they had agreed terms in relation to a proposed combination of Sainsbury’s and Asda Group Ltd, a wholly owned subsidiary of Walmart, to create an enlarged business. There are no planned Sainsbury’s or Asda store closures as a result of the merger. The proposed deal is conditional on clearance by the Competition and Markets Authority.

The Competitions and Markets Authority will hold pre-notification discussions with the parties and, when it has sufficient information, will commence its phase 1 investigation. Usually a phase 1 investigation will last up to 40 working days before the authority will decide whether to clear the merger or refer it on to a detailed phase 2 investigation. I understand that the parties have requested to fast-track straight to phase 2. As part of its competition inquiry, the CMA can look at the buying power of a merged company in relation to its suppliers and the impact that the merger would have on them. Decisions about mergers are taken independently of ministerial control and are subject to legal challenge. Under the Enterprise Act 2002, Ministers have the power to intervene in mergers only on public interest grounds covering national security, media plurality and financial stability.

[This section has been corrected on 2 May 2018, column 4MC — read correction]Today the Secretary of State and I have spoken to Sainsbury’s chief executive officer Mike Coupe, and Asda CEO Sean Clarke, so that we can better understand their plans. Additionally, I have today spoken to the Union of Shop, Distributive and Allied Workers and Unite unions, and I will speak to the GMB union immediately after leaving here. When I spoke to Len McCluskey this morning, I made it clear that I expect Sainsbury’s and Asda to conduct proper and thorough engagement with the unions. This afternoon, I have spoken to the Groceries Code Adjudicator, Christine Tacon, to reiterate the importance of ensuring that suppliers, particularly small and medium-sized enterprises, are treated fairly.

The UK’s merger regime is designed to offer clarity for businesses and to build investor confidence. Mergers are an important part of a dynamic economy, and the Government appreciate that they can bring real benefits to consumers and the economy as a whole by attracting inward investment. We will continue to monitor the situation closely.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

The landscape for retailers has become increasingly difficult over recent years, and I am sure that the Minister shares my concerns regarding this deal, given its potential to squeeze competition in the market and the risks that it poses to workers, suppliers and consumers. He confirmed that there will be no store closures, but will he also confirm that there will be no job losses, no changes to pay, terms and conditions, and no closure of any sites within each company’s estates portfolio—distribution sites and offices, for example? If so, for how long will that promise be effective, and will he seek legally binding assurances?

It is clear that a duopoly of the big supermarkets—Tesco, and Asda and Sainsbury’s—will now emerge providing never-before-seen bargaining power. Indeed, the statement this morning included a promise to bring prices down for consumers, but it is feared that that will be at the expense of suppliers, farmers and manufacturers whose prices and terms will be driven down, pushing many to the edge of collapse. Can the Minister confirm that that will not be the case? In addition, does he agree that control of 60% of the market by the duopoly may pose a risk to consumer choice and provide less incentive to entice with good offers? If so, what assurances has he received in that regard? I am sure that he agrees that an urgent CMA investigation is imperative, but can he confirm that the CMA will prevent the integration of the companies during investigation, as it is entitled to do?

The Minister will agree that many of the risks associated with this deal do not bear directly on the CMA’s remit of testing whether there would be a substantial lessening of competition. As he said, he has no power to intervene directly in the merger as it does not meet the public interest tests of national security, media plurality and financial stability. Given that the deal could radically alter the whole grocery sector—from farm and factory to supermarket shelf—will he finally use his powers to broaden the scope of the public interest test to include deals of such economic and national significance, as he has been repeatedly asked to do?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I thank the hon. Lady for her important points. I share many of the concerns that she voices, but she says that the CMA’s remit does not extend to the substantial lessening of competition—[Interruption.] That is exactly what the CMA does. Its role is to examine competition matters—[Interruption.] If I misheard the hon. Lady, I apologise.

The CMA’s role is to consider the impact of this merger on not just competition in the marketplace, but suppliers. She rightly raised the impact that the merger could have on farmers and suppliers, and that was why the Secretary of State and I reiterated to Asda and Sainsbury’s when we spoke to them this morning the importance of their engaging with not just the CMA, but bodies such as the National Farmers Union and other unions to ensure that this is a proper process that we understand. The hon. Lady will know that section 172 of the Companies Act 2006 puts a duty on directors of the new company to have regard to the impact that their decisions would have on their suppliers, and we will be monitoring that very closely in the months to come.

We must also recognise, as the hon. Lady said at the very beginning of her contribution, that the retail sector is in a huge state of flux. We must all understand that the way in which consumers purchase these days is changing dramatically. There has been a 9% increase in sales through online vehicles in the last 12 months alone. That, by necessity, means that the retail sector has to change and adapt. One of the things that the merger will offer is reduced costs for the consumer, which I hope she will welcome. We all want to protect the consumer and make sure they are getting great value for money, and that is one of the things that the merger promises. I can assure her, from the discussions I have had with the CMA, the Groceries Code Adjudicator and both parties, that ensuring the supply chain is properly protected is one of the priorities and something that I guarantee we will keep a close eye on.

Photo of Anne Main Anne Main Conservative, St Albans

The Minister said that he had a conversation with Mike Coupe about store closures this morning. Given that the CMA insisted that 53 stores were offloaded when the Safeway-Morrisons merger occurred in 2003, how can Mr Coupe give the Minister such an assurance, and what does the Minister have to say about that?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I thank my hon. Friend for that very important question. The reassurances I was given this morning were, first, that there would be no store closures; and, secondly, that the head offices of both Sainsbury’s and Asda would remain open. Those are both very positive things. My hon. Friend mentions the forced sale of particular branches, and that is clearly a matter for the Competition and Markets Authority. When Sainsbury’s and Asda move on to the phase 2 investigation, they will get down to the granularity of the merger’s impact on particular villages, towns and cities. If there is a feeling that it will cause a lack of competition in the marketplace, the CMA has the power, when making a decision, to force the sale of stores to competitors to ensure that there is greater competition for the consumer.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs)

The Secretary of State pointed out that the merger of Britain’s second and third largest supermarket chains will need to be approved by the Competition and Markets Authority and be scrutinised by regulators such as the Groceries Code Adjudicator, which was set up to protect small suppliers. As he said, the consumers’ voice is essential, and there are very real concerns that the merger will lead to reduced competition and be bad for shoppers, potentially hitting prices and the range of products available. Despite protestations to the contrary, fears remain that this could cost the jobs of the workers upon whose hard work these companies have been built. As we have heard, the Competition and Markets Authority may well demand that the combined group sells off some stores to prevent market dominance when there is both a Sainsbury’s and an Asda in the same area, but that can only be bad news for consumers and employees. Does the Secretary of State agree that the merger must not be at the expense of consumers’ interests or jobs, and will he commit to keeping the House updated on these important matters?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I thank the hon. Lady for her questions; she raises some very important points. Sadly, my responsibilities do not yet run to my being the Secretary of State, but I am grateful for the confidence and faith that she has shown in me.

In relation to the consumer, this is at the heart of what the CMA will consider. It will look at how this merger will affect our constituents—people concerned about the price of a pint of milk or a loaf of bread—and it will be very attuned to such an impact. All the assertions made by both Sainsbury’s and Asda so far show that they believe that this will lead to a reduction in costs, and therefore a reduction in prices on the shelf. The CMA and the Government will of course be keeping a close eye on that, but Sainsbury’s and Asda believe that this will lead to better prices for the consumer.

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

How does my hon. Friend believe the Competition and Markets Authority will react to the situation in the middle of Dunstable, where we have an Asda and a Sainsbury’s pretty much next door to each other, and also a Morrisons, a Tesco, an Aldi, a Lidl and an Amazon fulfilment centre in quite close proximity?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My hon. Friend is spoilt for choice, I would say, and that is what we want to see. We want a dynamic marketplace with great competition between retailers to provide not only greater choice, but better prices. The CMA will clearly look at that—during the six-month phase 2 investigation, it will draw together all the information in relation to particular villages, towns and cities—and I confirm to my hon. Friend that if there is any concern about choice and competition in Dunstable, the CMA will act on that and, if it has to, it will force the sale of stores to competitors.

Photo of Hilary Benn Hilary Benn Chair, Committee on Exiting the European Union

Asda said this morning that it will continue to be run from its head office in the centre of Leeds, where just over 2,000 people are employed. Given that in the last few months there have been two rounds of job losses at Asda’s head office, and in the light of what the Minister has just said about the merger providing an opportunity to cut costs, what assurance can he give staff in the head office that their jobs are safe?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The right hon. Gentleman will understand that any merger will be designed to improve efficiency, productivity and value for money for shareholders. So far, we have been given reassurances by Asda and Sainsbury’s that there will be no store closures and no job losses in stores. I cannot confirm to him as yet the impact that the merger will have on the head offices, other than to repeat the confirmation that we have been given that both head offices will be kept open. However, this is a decision for the CMA. I urge the right hon. Gentleman and other hon. and right hon. Members to bear in mind that the CMA will make a decision based on the evidence. If hon. and right hon. Members have evidence to contribute, they should make their case to the CMA to ensure that it considers all this on the facts.

Photo of Robert Halfon Robert Halfon Chair, Education Committee

I thank my hon. Friend for his statement. In Harlow we have an Asda and a Sainsbury’s, and many hundreds of local jobs depend on those supermarkets. Although the companies say today that there will be no job losses, my concern is that in a year or so’s time, when this has all been forgotten about, hundreds of jobs will suddenly be lost not just in stores, but in logistics centres, distribution centres and so on. We need guarantees that those jobs will not be lost.

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My right hon. Friend is a doughty fighter for his constituents, and I understand that he will be lobbying hard to ensure that there are no job losses. I reassure him that some 330,000 people are employed by this joint, merged organisation—it is a huge employer. It has given us very strong reassurances about jobs in stores. I urge him to engage not only with the CMA in relation to this investigation, but with both Asda and Sainsbury’s to make those points strongly and forcefully, as he always does.

Photo of Vincent Cable Vincent Cable Leader of the Liberal Democrats

The Minister referred to the importance of online business in driving this merger. Can he explain how the CMA’s terms of reference enable it properly to take into account competition between domestic bricks-and-mortar businesses and global online corporations such as Amazon?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Very few people know this area of competition policy better than the right hon. Gentleman. As I have pointed out, phase 2 of the CMA investigation will involve drawing together a panel that will consider all the facts about the size of the market and the impact. As part of that, they will use all their resources to ensure that they fully understand not just, as he puts it, the bricks-and-mortar marketplace, but competition from online retailers.

Photo of James Cleverly James Cleverly Deputy Chair, Conservative Party

I welcome the recent conversion of Rebecca Long Bailey to the concept of liberal, free market competition—there is more joy in heaven over one sinner who repents and all that. Will my hon. Friend the Minister ensure that however the merger plays out, he will always promote diversity of provision and competition to give consumers the greatest freedom and choice?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

As always, my hon. Friend makes his point extremely well. He is absolutely right that everybody benefits from a vibrant marketplace and increased competition. He will also understand that with my other hat on—as the Minister responsible for small business—I am keen to ensure that any merger such as this protects small suppliers and SMEs, which make up 99% of our business community and form the backbone of all our constituencies. Competition—yes, but it is hugely important that we have an eye to protecting those suppliers.

Photo of Rachel Reeves Rachel Reeves Chair, Business, Energy and Industrial Strategy Committee

Following on from the question asked my right hon. Friend Hilary Benn, Asda has been headquartered in Leeds for 50 years. It is a huge part of our civic and economic life, and our infrastructure. Given the Minister’s answer and the lack of assurance that he has received in his conversations with Asda and Sainsbury’s, people working at the Asda head office will be incredibly concerned about their future. The industrial strategy is about rebalancing the economy away from London and the south-east. What assurances can he give that the merger will not rebalance the economy away from Yorkshire and towards London?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I can give the hon. Lady the assurances that I was given by both Sainsbury’s and Asda, which is that both head offices will continue to be maintained. Over recent months, we have seen the real pressure the retail sector is under with the loss of some very well loved and well known high street names as the result of a very challenging business environment.

I make no comment on the validity or the veracity of the merger details—that is for the CMA to decide—but clearly what we see is two businesses trying to get ahead of the curve and futureproof themselves in a very challenging market. The hon. Lady is a doughty champion for her constituents, so I am sure she will engage with both Sainsbury’s and Asda to seek further reassurances, but I can reassure her that that head office will remain open.

Photo of Mark Menzies Mark Menzies Conservative, Fylde

For 11 years before I entered this place I worked in the head office of Asda, alongside my hon. Friend Philip Davies, in the constituency of Hilary Benn. I can therefore understand the concerns of those who work there today. The Minister cannot provide assurances about the future of the head office—indeed, I do not believe that it will be there in a few years’ time.

I urge the Minister please not to view this as a merger. It is not a merger: it is a takeover by Sainsbury’s, in return for 42% of stock and £2.5 billion to Walmart. That is what it is, so let us stop using false terminology to describe what is actually happening. I urge the Minister to focus on the jobs in distribution centres, many of which are in working areas of the country. If this measure goes ahead, the distribution centres will be absolutely hammered a year or two down the line.

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I understand very clearly the points my hon. Friend makes. He may not believe it to be a merger, but this is a merger within the legal definition that will be considered by the CMA. Clearly, there will be changes to the way the business is run to make it efficient and to keep it running well into the future. The assurances that Sainsbury’s and Asda have given us are that they will continue to run them as two separate businesses. I hope I can reassure my hon. Friend that, from the information we have been given, those head offices will continue.

Photo of Tracy Brabin Tracy Brabin Shadow Minister (Education)

Asda is a substantial employer in my constituency. With £500 million of efficiency savings coming down the track, will the Minister tell us what discussions he had, in the meeting with the chief executive officers, about how to protect jobs and the number of hours worked by employees? Each job loss has a massive impact on my community, which is already suffering under Tory austerity.

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Asda and Sainsbury’s believe that the way to protect those jobs is by making the business efficient, effective, and able to compete and improve its market share. The shareholders will be asked to vote to approve the merger deal, so they, too, believe that—otherwise they would not vote for it.

I think the hon. Lady needs to be careful not to cause undue concern. The public assurances provided by both Sainsbury’s and Asda so far are that there will be no job losses in stores and that there will be no store closures. Clearly, the aspiration behind the public utterances from Sainsbury’s and Asda is that they want their businesses to improve. The recent takeover by Sainsbury’s of Argos saw efficiencies and improvements in that business lead to more people being employed. I am responsible for any merger and competition issues, which will be considered by the CMA. I urge her to engage with, and make her points to, the businesses themselves.

Several hon. Members:

rose—

Photo of John Bercow John Bercow Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee

Order. As always, I am keen to seek to accommodate the extent of colleagues’ interest in an urgent question, but I remind the House that there is a further urgent question to follow this and thereafter, a statement by the Secretary of State for International Development on the situation in Syria, which, judging by precedent, I anticipate to evoke much interest. Therefore, there is a premium on brevity from Back and Front Benchers alike.

Photo of Antoinette Sandbach Antoinette Sandbach Conservative, Eddisbury

Dairy farmers in my constituency supply milk to both Asda and Sainsbury’s. Will there be an easy way for those family-run businesses to be able to feed into potential efficiencies that may threaten the supply chain?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My hon. Friend makes an important point—I have dairy farmers in my constituency—and this is one of the issues that I have raised with Christine Tacon, the Groceries Code Adjudicator. My hon. Friend will know that in the last few weeks, in conjunction with the Department for Environment, Food and Rural Affairs, the Groceries Code Adjudicator and the Department for Business, Energy and Industrial Strategy, we have brought forward new proposals on dairy contracts to help exactly the kind of small suppliers that she talks about. In conversations with Sainsbury’s and Asda, both of them talk about the very real relationships that they have with their suppliers—with their dairy farmers. I hope that we can get some assurances to protect those relationships.

Photo of David Hanson David Hanson Labour, Delyn

Just to be clear, suppliers will not be squeezed, head offices will stay open and stores such as those in Flint, where there is an Asda next door to a Sainsbury’s, will both be open in two years’ time. Has the Minister sought those assurances from the companies today?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Let me reiterate to the right hon. Gentleman that the matter of stores in the same town will be considered as part of the phase 2 investigation by the CMA panel. It will consider the impact of the merger on individual towns. If it believes that it is anti-competitive, that it will lead to a worse deal for the consumer if the two supermarkets—one being Asda, one being Sainsbury’s—stay open, and if it has concerns, it will force the sale to a competitor.

As my hon. Friend Andrew Selous said, where there is a wider marketplace with a huge number of supermarkets, the CMA’s view may well be that there is no impact on competition in the town as a result of the merger. However, it is clear that this will be judged on a case-by-case basis, to protect the individual consumers in the right hon. Gentleman’s constituency and mine.

Photo of Chris Skidmore Chris Skidmore Vice-Chair, Conservative Party

Asda in Longwell Green and Sainsbury’s in Emersons Green have been huge economic success stories in recent years, taking on hundreds of extra jobs since 2010 without the interference of Government. Will the Minister confirm that it is not the Government’s duty to be heavy-handed about the business interests of companies, but instead to create the right economic climate that will create jobs for the future?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My hon. Friend is absolutely right: we want these businesses to grow and thrive. We want a dynamic retail sector. That is why just last month, I established the Retail Sector Council to bring together the major players in the retail industry to ensure that the Government are creating exactly the conditions that he highlights, to allow these businesses to grow and prosper. But as I said, look at the facts: the combined company will employ some 330,000 people. We as a Government want to encourage those jobs—not to get in the way and prevent them.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Exiting the European Union)

Although I am encouraged to hear the assurances about store closures and store jobs—I am also a former colleague at Asda—I encourage the Minister to be very careful about making assurances, particularly about Asda House, but also about jobs in distribution centres. Forces are at play that are far wider than just this merger—worrying though this is—and which will not be examined by the CMA. Specifically for me, the issue is automation in the logistics and warehousing sector, where I can imagine about 80% of jobs no longer existing in the future. That would particularly hit the north-east of England, south Wales and other areas that have become dependent on these jobs. As well as looking at this issue, the Government need to look more widely at those broader trends. Is the Minister going to do that?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I knew that the UK was a country of shopkeepers, but I had not realised that so many Members had retail experience in our supermarkets; it is encouraging to have such a well-informed debate. The hon. Lady raises issues about the supply chain and distribution sector. Clearly that is not within the scope of the CMA investigation. The Enterprise Act 2002 clearly sets out the role that the Government and Ministers can play in relation to takeovers and mergers, and it is important that we stick to those established rules. That is what we will be doing in this case.

Photo of Stephen Kerr Stephen Kerr Conservative, Stirling

Following on from the Minister’s last comments, it is right that concerns be raised about jobs and consumer choice, but will he confirm that producers will be able to provide evidence to the CMA on the potentially devastating effect of this concentration of market power through this market consolidation?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Not only can I confirm to my hon. Friend that producers’ voices will be heard in the CMA deliberation—this six-month detailed process that will consider all the aspects, vertical and horizontal, of the merger—but I positively urge him to go back to his constituency, engage with his dairy farmers and small suppliers, and make sure they contribute to it to guarantee that their voices are heard.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

I hear what the Minister says about the dairy industry, but this is not just about the small producer; it is about the relationship between the producer, the processer and the retailer—and that has been a poisonous relationship for decades. How will this increased concentration at the retail end help that relationship?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Clearly, the hon. Gentleman has a great deal of experience in this area—I know that his constituency was badly affected by the foot and mouth outbreak and that he did a very good job at the time. The correct formula for finding a resolution for his dairy farmers and the supply chain is through the Groceries Code Adjudicator. She has proved to be incredibly effective in standing up for the supply chain—not just for the small dairy farmers, but for the wider industry. If he has concerns, I know she will take them very seriously, so I urge him to take them up with her.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

Today’s announcement will be of concern to staff at Sainsbury’s store support centre at Ansty Park, in my constituency, where they are engaged in buying, design and merchandising—functions that came up to the midlands from London. I had the opportunity to visit the site a couple of years ago. Will the Minister reassure those staff that they will have an opportunity to make representations to the CMA?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My hon. Friend is absolutely right. Huge strides forward were made in getting these jobs out of London and further north, and I know he has done a very good job in representing employees’ views. I can reassure him that their voices will be heard. He should convene a meeting, talk to the workforce and encourage them to contribute to the CMA inquiry.

Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth

I draw the House’s attention to my declaration in the Register of Members’ Financial Interests as a member of the GMB. I met members of the GMB in Asda in my constituency last year and other retail workers represented by the Union of Shop, Distributive and Allied Workers and Unite. Does the Minister understand the concerns in Cardiff, given the loss of almost 1,000 jobs in the last year at Tesco House in Cardiff, which affected many of my own constituents, and given that his Government’s own analysis on Brexit shows it will hit the retail and food and drinks sectors extremely hard in all the scenarios?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I understand the hon. Gentleman’s points, which is why one of the first things I did after being made Minister was to pick up the phone to the union representatives he talks about. We want to make sure that employees’ voices are heard and that there is proper engagement over the merger. It is clear, though, that in no way is this a response to Brexit. These are businesses based in the UK and competing in the UK, and the business will continue to be listed on the London stock exchange post the merger. I recognise the hon. Gentleman’s concerns, which he raises on behalf of his constituents, but perhaps we should stop playing politics with Brexit.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

The town of Kettering has a large Sainsbury’s and a large Asda. If this merger goes through, what Kettering shoppers and supermarket employees want to know is: will we still have both stores in two years?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I think that what Kettering’s shoppers and workers want to know is first that they have choice and competition, and secondly that those jobs are protected. If both supermarkets are thriving, either the Competition and Markets Authority will decide that there is no competition issue and allow the merged company to continue to run both, or it will say that there is a competition issue and that it has concerns for my hon. Friend’s constituents, and it will force one of them to be sold to a competitor who will, hopefully, run it just as effectively.

Photo of Chris Matheson Chris Matheson Shadow Minister (Cabinet Office)

May I press the Minister on the question of distribution depots, which Mr Coupe has chosen not to protect? I remind the House that many of the distribution sites were established because of the decline in manufacturing, to replace manufacturing jobs. What assurances will the Minister seek from Mr Coupe and his fellow directors to guarantee that the jobs remain in those difficult areas?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I understand the point that the hon. Gentleman has made. He is clearly concerned about those jobs. There are a number of distribution jobs in my own constituency, Burton being at the centre of the country and well connected.

Let me make two points. First, the number of supermarkets being serviced will be the same, so the number of lorries, distribution outlets and goods being shipped will also be the same. Secondly, I have no power over the issue of jobs in relation to mergers. The Enterprise Act 2002 limited such powers. While we can have conversations, I urge the hon. Gentleman to do the same to protect those jobs.

Photo of Andrew Jones Andrew Jones Vice-Chair, Conservative Party

Having previously been a supplier to both companies, I read about the proposed deal with much interest. Can my hon. Friend confirm that the implications for all parties will be considered—particularly the implications for the smaller regional food producers?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Let me say again that, as the small business Minister, I am particularly attuned to that issue. I think that all of us, as consumers and as parliamentarians, want those small food producers—those artisanal businesses—to grow and thrive. Both Asda and Sainsbury’s have given assurances that they want to continue those important relationships. However, the Competition and Markets Authority, within its powers, will consider the impact on the supply chain.

Photo of Susan Elan Jones Susan Elan Jones Labour, Clwyd South

Does the Minister think that this is a good deal or a bad deal for British farming?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I think the hon. Lady will understand that it is a deal that must be considered by the shareholders of both Asda and Sainsbury’s. It would be inappropriate for me as the Minister, given my role, to pass judgment on its validity or veracity.

Photo of Dr Caroline Johnson Dr Caroline Johnson Conservative, Sleaford and North Hykeham

The Minister said that he had had discussions with the National Farmers Union. Many in the agricultural sector already think that the large supermarkets have too much power over buying and prices. What assurances can the Minister give the farmers, growers and food producers in my constituency—[Interruption.] What assurances can the Minister give them that they will be able to work on a level playing field and obtain fair prices for their produce?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My hon. Friend can hear for herself the support that there is in the House for the suppliers, growers and farmers in her constituency.

Let me clarify one issue. I did not say that I had spoken to the NFU; I said that I had urged both Sainsbury’s and Asda to engage with the NFU in order to understand the position properly. As I have said, the CMA will be concerned about the impact on the supply chain, but, just as important, the Groceries Code Adjudicator will also be there to champion the small producers to whom my hon. Friend has referred.

Photo of Chris Elmore Chris Elmore Opposition Whip (Commons)

Sadly for the Minister, here is another question from a Member who started his working life in a supermarket—luckily, probably, only as a butcher in Tesco, but there we are.

Does the Minister agree that it is unacceptable to keep workers waiting until 2019 for certainty about their jobs, as indicated in the CMA’s statement? What will he do to try to improve the process as soon as possible?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I can honestly say that Tesco’s loss is the House’s gain.

I recognise that this is an uncertain time for workers—that is why we have engaged with the unions to try to give them as much reassurance as we can—but this is clearly a complicated and complex process. These are huge businesses, and we need to understand properly the impacts that the merger will have—not just on jobs in those businesses, but on the supply chain and competition throughout the country. While I am keen for us to secure a resolution as quickly as possible, I think that, unfortunately, we must let the process run its course.

Photo of Tom Pursglove Tom Pursglove Conservative, Corby

A new Asda store recently opened in Raunds; that has been particularly welcome for my constituents because of the positive impact it has had on petrol prices. What timescales does the Minister envisage for this process and is he aware of any impact on portfolio investments?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Those are important questions. If there is a phase 1 investigation, that will take 40 days. As I have said, both parties are urging the CMA to consider a fast-track approach. If it does that, phase 2 could be completed in six months. I can reassure my hon. Friend that the CMA will take very seriously the other issues he raises.

Photo of Jack Dromey Jack Dromey Shadow Minister (Work and Pensions) (Pensions)

I know from my union experience that supermarkets are powerful both as employers and along their supply chains. They must not be allowed to abuse that power. Does the Minister understand the dismay of employees about this announcement that came out of the blue, and will he act to ensure that the guarantees given by the two supermarkets, about which he has waxed lyrical today, are not just day-one guarantees, but can be counted on by workers in the years to come?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I thank the hon. Gentleman for his concern and recognise his passion as a previous trade union representative. He asks about the validity and veracity of the assurances given so far by Sainsbury’s and Asda. It is early days—we are not even at day one into this process—so we will see how that develops. On his aspiration that we protect the farmers and small suppliers, I gently point out that it was this Government who introduced the Groceries Code Adjudicator and brought in those tough measures and protections to help our farmers and the supply chain.

Photo of Kevin Foster Kevin Foster Conservative, Torbay

Four of the five major retail supermarket sites in Torbay are occupied by either Asda or Sainsbury’s, and the two stores are right next to each other in Paignton. What reassurances can the Minister give me that communities and local councils will be able to feed in their views to the CMA, to ensure that competition at a local level is preserved?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My hon. Friend raises important points, and I know that his constituents will be concerned. I can assure him that the CMA will take representations. If he would like to meet personally with the CMA, I would be delighted to try to help facilitate that.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Transport)

The Foss Islands Sainsbury’s and Asda are also adjacent to one another, and staff will have woken up this morning to hear the announcement not from their employers but on the radio. What is the Minister doing to ensure staff get the support now that they need?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

We have engaged with Sainsbury’s and Asda to urge them to speak to their staff, and we have also engaged very openly and honestly with the trade unions. We want to see proper and early engagement and consultation in this process to ensure that the workforce is protected, but the public assurances that both Sainsbury’s and ASDA are giving at present are that all the stores, and all the jobs in the stores, will be protected.

Photo of Justin Madders Justin Madders Shadow Minister (Health and Social Care)

We know in takeovers and mergers of this nature that, as sure as night follows day, it is the workers who end up paying for the efficiency savings that have been set out. I have to say that, given the number of assurances the Minister has talked about today, I think attacks on terms and conditions are almost inevitable. When that happens in two years’ time, what will the Minister do?

Photo of Andrew Griffiths Andrew Griffiths Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The rules under which we operate in relation to mergers and takeovers were established in the Enterprise Act 2002 under a Labour Government. They have worked well and allowed businesses to grow, develop and merge to the benefit of both shareholders and the employers. The Department is, of course, closely following what is going on, but decisions in relation to this merger are for the CMA.