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CMA approves Tesco's £3.7bn acquisition of Booker

RBR Staff Writer Published 21 December 2017

The Competition and Markets Authority (CMA) of the UK has given its approval for Tesco's acquisition of Booker.

After conducting an in-depth review, the regulatory authority concluded that the £3.7bn deal does not raise concerns about competition.

CMA stated that Tesco, as a retailer, and Booker, as a wholesaler, do not compete head-to-head in most of their activities.

On other hand, Booker owns some supplies shops such as Premier, Londis and Budgens that compete with Tesco and hence, CMA claims to have considered the impact. Booker as a wholesaler does not own the shops it supplies and the retailers can price and stocking of the products.

The in-depth review, which was conducted in two phases, included survey of hundreds of retailers who stated that most shops use more than one wholesaler and would switch very often.

In the survey, the retailers stated that if Booker raises its prices after the Tesco merger, then they would stop buying from Booker altogether.

CMA inquiry group chairperson 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.

“This has been an important investigation for us. Millions of people use their local supermarket or convenience store to buy their groceries or essentials, so it is vital that they have enough choice to secure the best deal for them. Having examined the evidence in depth, we are satisfied this will remain the case following the merger.”

The deal was announced this January. With the CMA clearance, it can proceed towards shareholder votes. The transaction is expected to be completed by March 2018.

Image: CMA clears Tesco-Booker merger. Photo: Courtesy of Roger Cornfoot/Wikipedia.org.