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Competition watchdog to probe Tesco merger with wholesaler Booker

Competition watchdog to probe Tesco merger with wholesaler Booker

Wednesday 12 July 2017

Competition watchdog to probe Tesco merger with wholesaler Booker

The CMA is concerned the proposed deal could harm competition in many local areas.

The competition watchdog is to conduct an in-depth investigation into the £3.7 billion merger between Tesco and food wholesaler Booker.

The Competition and Markets Authority (CMA) said on Wednesday that it believes that competition could be harmed in more than 350 local areas where there is an overlap between Tesco shops and Booker “symbol stores”.

Booker is the country’s largest wholesaler and owns Londis and Budgens as franchised outlets, and the CMA is concerned that shoppers could face worse terms when buying their groceries as a result of the deal.

The watchdog added that there are concerns over the “potential for Booker to reduce the wholesale services or terms it offers the ‘symbol’ stores it currently supplies, in order to drive customers to their local Tesco”.

The CMA now has 24 weeks to conduct its probe and pledged to publish its final report before Christmas, after an earlier provisional findings document is released.

Tesco is Britain’s biggest retailer, while Booker is the UK’s largest cash-and-carry operator with around 13,000 staff and around 200 stores.

Tesco has faced criticism from investors over the deal, with some shareholders branding the takeover tilt a “distraction” and urging the Big Four grocer to scrap it.

Booker is the UK's largest cash-and-carry operator (PA)
Booker is the UK’s largest cash-and-carry operator (PA)

The CMA said the investigation will now pass to a new set of decision makers, an inquiry group chosen from independent panel members.

They will assess whether the deal could reduce competition by seeking views and evidence from all those potentially affected by the merger.

A Tesco spokesperson said: “We are pleased that the CMA has accepted our fast track request, and we look forward to continuing our engagement over the coming months.

“This merger has always been about growth, and we remain convinced that it will bring benefits for consumers, independent retailers, caterers, small businesses, suppliers and colleagues.”

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