SUPERMARKET giant J Sainsbury saw £471 million wiped off its market value yesterday after it mounted a legal challenge to the way the competition watchdog is handling an investigation into its proposed merger with rival Asda.

The rival chains announced at the end of April that they planned to join forces, with the Competition and Markets Authority (CMA) starting to look at the deal soon after before launching a formal investigation in August.

That investigation is due to conclude at the beginning of March, with the regulator expected to issue its final report on the merger later that month.

However, the supermarkets yesterday said they are seeking to challenge the way the investigation is being handled in the Competition Appeal Tribunal, claiming that the CMA’s timetable does not provide enough time for them to prepare or for the CMA to consider all the evidence it gathers.

As they have filed a judicial review application, the companies are seeking to challenge the process of the investigation rather than the actual investigation or its potential findings.

In an announcement to the London Stock Exchange J Sainsbury, which is a constituent of the FTSE 100, said that it and Walmart-owned Asda were seeking a review of both the “timetable and the process” of the investigation.

It added that this is in reflection of “both parties’ view that the current timetable does not give the parties or the CMA sufficient time to provide and consider all the evidence given the unprecedented scale and complexity of the case”.

“Both Parties have engaged constructively with the CMA to date and have made repeated requests for additional time,” it added.

“Specifically, we have asked the CMA for an additional 11 working days over the Christmas period to respond to a large amount of material recently provided to us.”

The businesses later issued a joint statement in which they said the decision to apply for a judicial review was “not one we have taken lightly”.

“This is a case of unprecedented size and complexity and we have a responsibility to our customers and colleagues to ensure that we and the CMA have enough time to make and consider all the facts and evidence,” they said.

“It is about ensuring a thorough process and reasonable timetable. We remain confident in the case for merging the businesses and the significant customer benefits.

“We are confident in the merits of the deal and our ability to deliver the synergies. By bringing our two businesses together, we will invest further in range, quality and customer service, while lowering prices and reducing the cost of living for millions of UK households.

However, the CMA said in a statement that allowing the companies extra time to respond to the investigation would put its ability to complete the process by the required deadline “at very serious risk”.

“As with all of our merger reviews, we construct our timetable to ensure that everyone has the chance to have their say, including customers, the companies involved and suppliers,” it said.

“Our first priority in this investigation has, and will continue to be, assessing if shoppers would face higher prices or a lower quality of service as a result of the merger and, if so, to prevent that from happening.

“Investigating any merger of this size requires assessing a large volume of material in a short timeframe, and it is not unusual for the companies involved to do this in the timelines we have been working to with Sainsbury’s and Asda.

“We have done everything we can to aid their consideration of this work, whilst still ensuring we are able to meet our legally binding deadline. This includes extending certain administration timelines where appropriate.”

J Sainsbury’s share price fell by seven per cent, from 296.4p to 275p.