Sainsbury's 2

The prospect of a merger between two of the UK's biggest supermarkets has been cast in doubt after regulators said it could cause price rises and reduced choice.

Sainsbury's and Asda confirmed plans for a merger in April 2018, vowing the move would allow it to cut prices because of the larger size of the combined company. The merger would give the supermarkets nearly a third of the industry in the UK with nearly 3,000 stores across the country.

However, the Competition and Markets Authority (CMA) said it would be difficult for the supermarkets to address their concerns. It said it would need to either block the move altogether or force Sainsbury's and Asda to sell certain assets and operations.

Sainsbury's chief executive, Mike Coupe, described the analysis as "outrageous" and "fundamentally flawed". He also said: "They [CMA] have fundamentally moved the goalposts, changed the shape of the ball and chosen a different playing field."

Stuart McIntosh, chair of the CMA's independent inquiry group, said: "We have provisionally found that, should the two merge, shoppers could face higher prices, reduced quality and choice, and a poorer overall shopping experience across the UK.

"We also have concerns that prices could rise at a large number of their petrol stations."

In addition to Mike Coupe's comments, Sainsbury's and Asda issued a joint statement, reiterating their belief that the merger would create "significant cost savings, which would allow us to lower prices".

It added: "Despite the savings being independently reviewed by two separate industry specialists, the CMA has chosen to discount them as benefits."