Asda owners quizzed over action to curb price rises
- Published
MPs have questioned Asda over whether issues over its finances are stopping it doing more to tackle soaring prices.
In a letter to one of its co-owners, the chair of the business committee demanded an explanation of the grocer's "complex" company structure and details about loans and investments.
It comes after Asda executives were grilled by politicians in July over concerns about high fuel prices.
An Asda spokesman said it was co-operating with the committee's inquiry.
The billionaire Issa brothers bought Asda in 2020 in a £6.8bn deal. They then merged it last May with the UK and Irish division of their petrol forecourt business EG Group, greatly expanding Asda's network of filling stations.
But unions have raised concerns that the takeover, which doubled Asda's debt levels, could leave the supermarket struggling with rising interest rates.
The letter from the chair, external of the Commons business committee, Labour MP Darren Jones, is addressed to Mohsin Issa. It asks whether Asda's "complex company structure" may "restrict your ability to help meet cost-of-living pressures on your customers".
It also seeks extra information about levels of investment and loans from EG Group, which helped fund the battle to buy Asda from the US supermarket giant Walmart.
"When you and your brother bought Asda from Walmart for £6.8bn, you personally invested £200m. Where did this finance come from?" Mr Jones' letter reads.
The letter, dated 30 August, also quizzes Mr Issa on whether millions of euros in interest-free loans were used to purchase private jets.
"These questions are to help us understand if you are enabling Asda to do all that it can to help keep costs down during a cost-of-living crisis," it says.
The Issa brothers have come under fire in recent months, including during an appearance in front of MPs on fuel prices and employment tactics.
During a committee hearing in July, politicians repeatedly asked questions about Asda's margins on petrol, which they felt went unanswered.
"Might I say this has been quite an extraordinary session - not in the way that I hoped it would have been," commented Darren Jones, who on Monday was given the new job of shadow chief secretary to the Treasury.
If followed investigations by the UK's competition watchdog into concerns that grocers including Asda were not passing on falling wholesale food and fuel prices to consumers.
The supermarkets deny profiteering, although the Competition Markets Authority (CMA) has told them to make their food pricing clearer to help shoppers find the best deals.
Grocers have also been told to set up a scheme to allow motorists to compare live fuel prices online, after the CMA concluded drivers had been overcharged due to weak competition.
Petrol and diesel prices have dropped since the record highs last summer sparked by Russia's invasion of Ukraine, when diesel motorists were paying close to £2 a litre.
The CMA found average annual supermarket margins on fuel had increased by 6p per litre between 2019 and 2022 - equivalent to £900m in extra costs for drivers.
Like other grocers, Asda has cut the price of some basics recently as many households continue to struggle with the soaring cost of living.
In July, it announced price cuts on 226 own-label products, acknowledging that "families are continuing to feel the pinch financially".
An Asda spokesperson said that it would continue to "co-operate fully" with the committee's inquiry and will respond to its follow-up questions.
"Asda's owners are committed to the long-term sustainable growth of the business and are investing in both supporting customers and colleagues during these challenging times."
- Published31 August 2022
- Published27 June 2023
