Tesco merger with Booker gets provisional approval from CMA

Simon Polito

Simon Polito chair of the CMA

The CMA said competing wholesalers had expressed concerns Booker would benefit from improved suppliers' terms after the merger, making it hard for them to continue to compete.

The regulator said that the two companies don't compete head-to-head in most of their activities, stressing that Tesco doesn't supply the catering sector where Booker makes more than 30% of its sales.

Simon Polito, Chair of the inquiry group, said: "Millions of people use their local supermarket or convenience store to buy their groceries or essentials".

The CMA also considered the impact of the merger in every local area where a Tesco and a Booker-supplied shop were both present (more than 12,000 shops).

A raft of rival wholesalers have raised concerns the deal could see Booker benefit from improved supplier terms making it hard for them to compete.

It said they argued that Booker could raise prices to the shops it supplies. Strong competition in the market ensures that shoppers can choose the best deal for them.

S&P cuts Venezuela's sovereign debt rating to 'selective default'
Restrictions include a ban on U.S. entities buying any new Venezuela debt issues - usually a required step in any restructuring. President Nicolas Maduro has formed a commission to restructure Venezuela's sovereign debt and that of state oil company PDVSA.

In a statement, Tesco said: 'We look forward to creating the UK's leading food business, bringing together our combined expertise in retail and wholesale.

Last month seven of the UK's largest wholesalers who all voiced concerns that the deal would "threaten the survival of the independent retailer".

The CMA opened its phase 1 investigation into the merger in May. The provisional decision will now be issued for comment and further evidence before a final sign-off.

In a note to clients, Black wrote: "Congratulations to Dave Lewis, Charles Wilson and their advisors on seeing off the UK Competition & Markets Authority (CMA) and so gaining tacit approval for their merger, which should complete in early 2018, as the management always guided". Nisa members yesterday narrowly approved the £143 milion takeover of the chain by the Co-Operative Group, following an earlier abortive takeover by Sainsbury's.

Retail analyst Bruno Monteyne at Bernstein said the tie-up would make Tesco "not only the biggest grocer in the United Kingdom but also one of the fastest growing food retailers in the United Kingdom for many years to come".

Tesco and Booker's market share prices jumped by 5.65 and 5.74 per cent respectively after the news this morning (14 November).

Latest News