Tesco/Booker merger given provisional green light

Tesco and Booker merger

The CMA consequently began a fast-track probe into the deal in July.

The CMA said it recognised that Tesco's stores compete with Booker-supplied shops, and said it considered the impact of the merger in every local area where a Tesco and a Booker-supplied shop are both present - more than 12,000 shops.

A CMA statement released this morning said that Tesco as a retailer and Booker as a wholesaler - supplying to caterers, independent and symbol group retailers including Premier, Londis and Budgens - do not compete head to head in most of their activities.

The CMA pointed out that Tesco did not supply the catering sector, which makes up 30 per cent of Booker's sales.

Tesco has received the green light for a £3.7 billion takeover of Booker.

"The problem is there's a fine line between genius and lunacy, and this deal looks to be walking it. Tesco is a mature business with a high share of the market it operates in, and the Booker deal gives it the ability to leverage the buying power of the combined group".

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Rivals are concerned the deal could see Booker benefit from improved supplier terms, making it hard for them to compete.

The watchdog also ruled that the move was unlikely to increase prices or reduce services in locations with both a Tesco and a Booker-supplied supermarket due to the strong competition that exists in both the grocery wholesale and retail markets.

The Competition and Markets Authority (CMA) said, after conducting an in-depth review, that it had provisionally concluded that Tesco's purchase of Booker does not raise competition concerns.

Booker is the country's largest wholesaler and owns Londis and Budgens as franchised outlets, and the CMA has previously said it was anxious that shoppers could face worse terms when buying their groceries as a result of the deal.

The CMA will now take more evidence before making a final decision by the end of December.

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