Tesco's takeover of Booker cleared14 Nov 2017 08:37
See ShareCast News for full details- Tesco's controversial takeover of wholesaler Booker has been given provisional clearance by the UK competition authority after an in-depth review.
Booker supplies services to over 5,000 independent retailers operating under brands such as Londis and Budgens, with around 12,000 shops in areas where Tesco's shops competing with Booker-supplied shops.
On Tuesday the authority provisionally concluded that the level of competition in the grocery wholesale and retail markets would be sufficient to defeat a strategy where Tesco might try to raise prices or reduce
service levels either in retail or wholesale.
Furthermore, with a number of rival wholesalers warning Booker would benefit from improved suppliers' terms after the merger, the CMA did find that it was 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.
The CMA said this might increase competition in the wholesale market, as well as reducing prices for shopper, and would not affect competition in the longer term as Booker has less than 20% share of the UK grocery wholesaling market.
"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," said Simon Polito, chair of the inquiry.
For its part, Tesco said it would continue to work with the CMA as it prepares the final report due by the end of December and anticipate completion of the merger in early 2018.
"We look forward to creating the UK's leading food business, bringing together our combined expertise in retail and wholesale. This merger has always been about growth, and will bring benefits for independent retailers, caterers, small businesses, suppliers, consumers, and colleagues," the grocer said in a statement.
There was more good news for Tesco on Tuesday a data from Nielsen showed it had the
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