THE “bold” but ultimately doomed Sainsbury’s merger with Asda led to a sharp drop in share prices after it was blocked.

Sainsbury’s chief Mike Coupe claimed that the decision against the move effectively takes £1 billion out of customers’ pockets.

However, the robustness of the plan was put under the spotlight in its wake.

The competition watchdog has blocked the £12bn merger with Asda on the grounds that it would result in higher prices for consumers and damage competition.

In its final report into the deal, the Competition and Markets Authority (CMA) found that it would lead to increased prices in stores, online and at petrol stations across the UK.

READ MORE: Competition watchdog blocks Sainsbury’s-Asda merger

Shoppers and motorists would be “worse off” if Sainsbury’s and Walmart-owned Asda were to merge, the CMA said, adding that a tie-up would lead to price rises, reductions in the quality and range of products or a poorer overall retail experience.

The watchdog claimed that the deal would have resulted in a “substantial lessening of competition” at both a national and local level for people shopping in supermarkets.

Stuart McIntosh, chairman of the CMA inquiry group, said: “It’s our responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week.

“Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers.

“We have concluded that there is no effective way of addressing our concerns, other than to block the merger.”

READ MORE: Asda-Sainsbury’s deal hit by findings of regulatory probe

Prior to Thursday’s decision, Sainsbury’s and Walmart-owned Asda had offered to sell up to 150 stores as part of efforts to address competition concerns, and claimed that shoppers would be deprived of lower prices should it be blocked.

However, the CMA found 537 areas where there could be a substantial reduction in competition in supermarkets.

The duo had also pledged to make a number of post-merger commitments, had the deal been approved. It included investing £1 billion a year in lowering prices by the third year of the deal completing, equating to a 10% cut on everyday items.

READ MORE: Asda wins second place in battle of big stores

Mr Coupe said: "The specific reason for wanting to merge was to lower prices for customers. The CMA's conclusion that we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market.

The CMA is today effectively taking £1 billion out of customers' pockets."

Roger Burnley, of Asda, said: "We’re disappointed with their findings but will continue to find ways to put money back into customer’s pockets and deliver great quality and service in an ever changing and demanding market."

Neil Wilson, chief market analyst at Markets.com said that "the merger never looked like it would pass the CMA's tests".

Clive Black, of Shore Capital, said: "The referee has now blown the whistle on a deal that we give credit to its architect(s) for being bold but were set against a strategy and tactics that were most certainly not of a mould of the likes of Sir Alex Ferguson."

Sainsbury's shares dropped 10 per cent to 216p.