Walmart Inc.’s (WMT) struggling U.K. subsidiary could be blocked from merging with a larger rival over concerns from the country’s competition watchdog that the tie-up would lead to higher prices and a “poorer experience” for shoppers in Europe’s second-largest market.

Britain’s Competition and Markets Authority said Wednesday that the proposed merger between Asda Group and J Sainsbury’s Plc (JSAIY) , the country’s second largest supermarket operator, would reduce overall competition and drive up costs in both grocery stores and gas stations. The CMA, an agency within the U.K. government, said it may block the $9.5 billion deal unless the two sides sold “a significant number of stores and other assets – potentially including one of the Sainsbury’s or Asda brands” and issued an April 30 deadline for its final decision.

“These are two of the biggest supermarkets in the UK, with millions of people purchasing their products and services every day. 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,” the CMA said. “These are our provisional findings, however, and the companies and others now have the opportunity to respond to the analysis we’ve set out today.”

Sainsbury’s shares plunged 15.6% in the opening minutes of trading in London following the CMA release, to change hands at 242.8 pence each, the lowest since April 4. Walmart shares were marked 0.14% lower in pre-market trading in New York, indicating an opening bell price of $102.06 each.

Walmart’s Asda unit, Britain’s third-largest food retailer, saw same store sales growth slow to 1% over the three months ending in January, the company said Tuesday, well shy of the 4.2% growth rate recorded for Walmart stores in the United States.

The figures were a rare blip amid a much stronger-than-expected fourth quarter earnings release from Walmart, which included nearly $139 billion in global sales and lifted shares in the world’s biggest retailer to the highest level in more than three months. 

Last April, Sainsbury’s and Asda confirmed merger plans to create Britain’s biggest supermarket operator that marked a major change in strategy for Walmart in the United Kingdom after years of market share declines.

Walmart is set to own 42% of the combined group and will receive a cash payment of £2.975 billion that ultimately valued Asda, the third of the so-called “Big Four” U.K. supermarkets, at £7.3 billion ($10 billion) at the time the deal was agreed.

A combined Sainsbury’s and Asda will have annual revenues of around £51 billion, the companies said, with 2,800 stores and 47 million customer transactions per week. It would also vault the group over its larger rival, Tesco Plc, (TSCDY)  , into the number one position in Britain’s fiercely competitive grocery store market.