Home Business NewsBusiness Tesco-Booker merger gets formal approval from competition watchdog

Tesco-Booker merger gets formal approval from competition watchdog

20th Dec 17 10:25 am

The proposed tie-up is now able to proceed to shareholder votes

The Competition and Markets Authority (CMA) has formally cleared Tesco’s £3.7bn deal to buy wholesaler Booker, saying it has no concerns following an in-depth review.

The competition regulator’s decision means the proposed tie-up, first announced in January, is now able to proceed to shareholder votes.

Tesco is Britain’s biggest supermarket, with a market share of about 28 per cent while Booker is Britain’s largest food wholesaler.

The regulator stated: “Tesco, as a retailer, and Booker, as a wholesaler, do not compete head-to-head in most of their activities. However, since Booker supplies shops – such as Premier, Londis and Budgens – that do compete with Tesco, the group considered the impact of this carefully.”

“Booker does not own the shops it supplies and these retailers are free to set their prices and decide which products to stock. So, although these shops compete with Tesco, Booker cannot directly determine how they compete.

“Given Tesco’s influence generally in the retail sector, the CMA also examined whether the merged company could raise prices or reduce service quality at either the wholesale or retail levels. It found that existing strong competition in wholesale and retail made this unlikely.”

Chair of the CMA inquiry, Simon Polito, said: “We have carefully listened to feedback from retailers and wholesalers who operate in what are highly competitive UK retail and wholesale sectors.

“Retailers have told us that they shop around for the best prices and service from their wholesaler, and we are confident that this will continue after Tesco buys Booker.”

Tesco and Booker have welcomed the clearance.

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