The proposed merger between Sainsbury's and Asda has been blocked by the competition watchdog, because it could have raised prices for shoppers.

The Competition and Markets Authority (CMA) also said a merger would raise prices at the supermarkets' petrol stations and lead to longer queues at the checkouts, as reported by the BBC.

But the supermarkets said it would have cut their costs, allowing them to pass on lower prices for consumers across the UK.

If the deal had gone ahead, it would have created the UK's biggest supermarket chain, accounting for £1 in every £3 spent on groceries.

Asda has two stores in Gloucester and one in Cheltenham, while Sainsbury's has four stores in Cheltenham, two in Gloucester and one in Stroud. The risk from the merger would have been that stores in Gloucester or Cheltenham could have closed.

Nationally, Sainsbury's has more than 1,400 stores including around 800 convenience stores, while Asda has more than 600.

The CMA, which had raised concerns about the deal  earlier this year, said the merger would reduce competition locally and nationally.

Earlier this year, Sainsbury's and Asda pledged to sell between 125 and 150 of their supermarkets to allow the merger to go ahead, which would have meant significant job losses. They also promised to bring in £1bn of price cuts for customers if the deal went ahead.

Sainsbury's said the two supermarkets would not appeal the CMA's decision.

Punchline said: "We are glad to see that common sense has prevailed here. It's important for everybody that there continues to be competition in the marketplace. The only way for the two chains to save money would have been to close stores and cut jobs."