March 19, 2019 / 10:19 AM / a month ago

Sainsbury's-Asda pledge 1 bln stg of price cuts to salvage deal

LONDON, March 19 (Reuters) - British supermarket Sainsbury's and its takeover target Asda have committed to deliver 1 billion pounds ($1.3 billion) of lower prices annually by the third year after completion of their proposed 7.3 billion pounds ($9.7 billion) deal, they said on Tuesday.

Sainsbury's and Asda are attempting to overturn brutal provisional findings from Britain's competition regulator, the Competition and Markets Authority (CMA), which is examining the deal.

The CMA said last month its initial view was that Sainsbury's purchase of Walmart's Asda should be blocked in the absence of the sale of a large number of stores, or even one of the brands.

The two groups said they would invest 300 million pounds in the first year after combining and a further 700 million over the following two years - reducing prices "by around 10 percent on everyday items".

Sainsbury's also said it would cap its fuel gross profit margin to no more than 3.5 pence per litre for five years, while Asda will guarantee its existing fuel pricing strategy. ($1 = 0.7534 pounds) (Reporting by James Davey, Editing by Paul Sandle)

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