Sainsbury’s and Asda bosses have been roasted over their £12 billion merger by MPs, who accused them of providing “Mickey Mouse figures” in response to questions about the impact on small suppliers.
Mike Coupe and Roger Burnley were subjected to intense scrutiny over the proposed deal on Wednesday, facing down MPs on the environment, food and rural affairs select committee.
Committee chairman Neil Parish accused Mr Burnley of talking “baloney” when he side-stepped questions over how the supermarket would deliver a 10% cut on everyday items after the merger.
“We are not children, you can’t just come in here and give us a nursery rhyme,” Mr Parish said.
“Come on, let’s at least get some sense out of you, even if it’s not the truth.”
He went on to accuse Mr Burnley of quoting “Mickey Mouse figures” to the MPs leading the inquiry.
The Asda and Sainsbury’s chiefs said the price cuts will be achieved by pressuring larger suppliers, such as US cereal giant Post Holdings, which supplies Weetabix.
Mr Burnley said: “Chair, I can categorically say the synergy benefits are not based on taking 10% savings from individual suppliers.”
Sainsbury’s chief executive Mr Coupe said “it was not unreasonable” for the combined supermarkets to ask Post to charge the same price to both, and that this would create significant savings.
Mr Parish was unconvinced that large multinationals would agree to their demands, given that the merged company would still be smaller than Tesco by market share.
“It is not believable that it is only the top suppliers,” he said. “Because they are bigger than you, and they are bigger than your combined operations, and there is a player out there who is bigger than you are going to be.”
Mr Coupe also argued that small suppliers make up a relatively small proportion of the turnover, ruling out any incentive for the company to push down buying prices.
“Even if they were to give us all of the goods for free, it would be in the rounding,” he said.
Asda boss Mr Burnley said the price cuts would fall on a relatively small number of lines, but these would be the lines bought most often by consumers, such as bread, milk and meat products.
MPs and the competition authorities are examining the deal’s implications.