The Competition and Markets Authority (CMA) have provisionally given the Tesco’s (LON:TSCO) £3.7 billion takeover of Booker (LON:BOK) the all-clear.
After an in-depth investigation, the competition regulator said that the takeover did not raise any competition concerns. They concluded that the deal could even increase competition, lowering prices for consumers.
The CMA said it is “likely Booker would be able to negotiate better terms from a number of its suppliers for some of its groceries, and that it was likely to pass on some of the benefits of these savings to the shops that it supplies”.
“This might increase competition in the wholesale market, as well as reducing prices for shoppers.”
The regulator concluded the would “remain competitive in the longer term”, because Booker’s share of the market is less than 20 percent, and therefore “not sufficient to justify the longer-term concerns”.
Earlier fears during the investigation were that there is an overlap with Booker-supplied franchises such as Premier, Londis and Budgens. There was a concern they could face “worse terms” but the watchdog found that there was enough competition.
Simon Polito, who was in charge of the in-depth CMA investigation said: “Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers.”
Both pleased with the results of the provisional investigation, the CMA will publish results by the end of the year and the takeover will be completed soon into 2018.
“We look forward to creating the UK’s leading food business, bringing together our combined expertise in retail and wholesale,” said Tesco.
“This merger has always been about growth, and will bring benefits for independent retailers, caterers, small businesses, suppliers, consumers, and colleagues.
“We will continue to work with the CMA as it prepares the Final Report due by the end of December. We anticipate completion of the merger in early 2018.”
This week, Nisa members approved the takeover from The Co-op. The CMA will launch an investigation into the deal.