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December 21, 2017updated 05 Jan 2018 8:42am

CMA clears Tesco and Booker merger in UK

The UK's Competition and Markets Authority (CMA) has cleared the merger of Tesco with food wholesaler Booker after examining the evidence from a large number of wholesalers, suppliers and retail chains, as well as a survey of hundreds of retailers.

The UK’s Competition and Markets Authority (CMA) has cleared the merger of Tesco with food wholesaler Booker after examining the evidence from a large number of wholesalers, suppliers and retail chains, as well as a survey of hundreds of retailers.

The merger was cleared by a group of independent CMA panel members, who noted that Tesco and Booker do not come head-to-head with each other in most of their activities, and Tesco’s purchase of Booker does not raise competition concerns.

Booker currently supplies its products to shops such as Premier, Londis and Budgens, which do compete with Tesco’s offerings, and the panel members considered the impact of this activity carefully before giving their clearance to the merger.

“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.”

According to the CMA panel, Booker is a wholesaler and does not own the shops it supplies, and the retailers have the freedom to set their prices and decide which products to stock.

The group also studied if Tesco’s dominance in the retail sector could enable the merged company to raise prices or reduce service quality at either the wholesale or retail levels, and found that this situation is unlikely to take place due to the existing strong competition in wholesale and retail markets.

The competition authority also considered concerns that, after the merger, Booker could use Tesco’s buying power to purchase groceries from suppliers at lower prices, affecting other wholesalers in the market.

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CMA concluded that the wholesale market would remain competitive in the longer term, as Booker’s share of the UK grocery wholesaling market was not sufficient to justify these longer-term concerns.

CMA inquiry group chair 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.”