Rivals demand Tesco’s Booker deal is blocked
WHOLESALE bosses are battling Tesco’s £ 3.7bn takeover of Booker, warning that it could put them out of business.
Some of the country’s largest wholesale groups are urging the competitions watchdog to block the sale.
It comes just a day after Tesco boss Dave Lewis stressed he ‘remained confident’ about the Booker deal as he toasted upbeat Tesco results.
The Competition And Markets Authority is looking into the tieup due to concerns it could lead to higher prices in about 350 areas across the UK.
Tesco operates more than 3,000 stores but would also become a major supplier of small retailers if it bought Booker, which supplies more than 5,000 stores including Premier and Londis.
Now leading wholesalers – including Today’s Wholesale Services, Spar, Bestway, Bidfood, Landmark, Confex and Sugro – have written to the CMA to say the deal ‘ threatens the survival of the independent retailer’ by creating a group with such large buying power.
According to the letter seen by the Telegraph, they said: ‘Tesco will have incontestable power over the procurement of all grocery categories in the UK. Suppliers will find it even harder to resist Tesco’s demands.’
They added: ‘[Tesco] will be able to drive its competitors out of business. At the retail level, the combination of Booker’s wholesale prices and Tesco’s deep pockets will present independent retailers with a stark choice: Join a Booker/Tesco symbol or go out of business.’
Their letter echoes several formal submissions to the merger probe by the CMA.
Unnamed retailers warned: ‘A substantial lessening of competition will result because the acquisition of Booker will enhance Tesco’s ability to act across several markets with a view to raising prices and eliminating competition.’
The CMA said it had spoken to one wholesaler who warned that the deal had the ‘potential to wipe out wholesale competition’ and another who said it could be ‘disastrous to his business’.
Two wholesalers also expressed concerns the merged group would have access to information about the performance of other Booker-supplied chains.
Tesco and Booker have argued the tie-up will mean they can improve the choice, quality, value and service for customers, and deny it will undermine suppliers.
They have added: ‘Strong partnerships with suppliers are crucial to our business and allow us to give consumers the mix of household brand names, innovation and fresh produce that they want.
‘We believe suppliers will support the proposed merger – and the opportunities it brings for them, in terms of growth and additional revenue and/or in terms of efficiency and reduced cost.’
This week Tesco reported a 21.1pc leap in UK and Ireland operating profits to £471m, with sales rising from £ 27.3bn to £28.3bn. It has also resumed its dividend after halting it nearly three years ago, paying 1p per share in an interim payout.
The CMA is due to give its provisional findings in October.