Watch­dog gives green light for Tesco hopes to take over Booker

Food: Com­pe­ti­tion and Mar­kets Au­thor­ity said the two firms do not com­pete head to head in most ar­eas

The Courier & Advertiser (Dundee Edition) - - BUSINESS - Holly Wil­liams

Su­per­mar­ket gi­ant Tesco’s £3.7 bil­lion deal to buy whole­sale group Booker has been pro­vi­sion­ally cleared by the com­pe­ti­tion watch­dog.

The Com­pe­ti­tion and Mar­kets Au­thor­ity (CMA) said its in-depth in­ves­ti­ga­tion into the tie-up found it did not raise com­pe­ti­tion con­cerns, de­spite fears voiced by ri­val whole­salers.

The CMA said Tesco and Booker do not com­pete “head-to-head” in most ar­eas in which they op­er­ate.

“In par­tic­u­lar, Tesco does not sup­ply the cater­ing sec­tor to which Booker makes over 30% of its sales,” the CMA said.

It comes de­spite the CMA hav­ing ear­lier raised fears over 350 lo­cal ar­eas of over­lap be­tween Tesco and Booker where it feared the deal could lead to “worse terms”.

Si­mon Polito, chair­man of the CMA’s in­quiry group, said: “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.”

The CMA’s find­ings can be seen as sur­pris­ing given its pre­vi­ous con­cerns over the deal, which was first an­nounced in Jan­uary.

Booker is the coun­try’s largest whole­saler and owns Londis and Bud­gens as fran­chised out­lets.

The CMA pre­vi­ously said it was wor­ried that shop­pers could face worse terms when buy­ing their gro­ceries as a re­sult of the deal.

A raft of ri­val whole­salers have also raised con­cerns that the deal could see Booker ben­e­fit from im­proved sup­plier terms mak­ing it dif­fi­cult for them to com­pete, ac­cord­ing to the CMA.

It said they ar­gued that Booker could raise prices to the shops it sup­plies.

But on an­nounc­ing its pro­vi­sional find­ings, the CMA said Booker would be able to ne­go­ti­ate bet­ter terms from its sup­pli­ers for some of its gro­ceries, and was likely to pass on these sav­ings to the shops it sup­plies.

“This might in­crease com­pe­ti­tion in the whole­sale mar­ket, as well as re­duc­ing prices for shop­pers,” the CMA said.

Tesco shares rose 6.24% or 11.05p to 188.05p.

Pic­ture: Steve MacDougall.

The Booker site in Dun­si­nane Av­enue, Dundee. Tesco’s £3.7 bil­lion deal to buy the whole­sale group has been pro­vi­sion­ally cleared by the com­pe­ti­tion watch­dog.

Pic­ture: Bob Dou­glas.

The Tesco Ex­tra store at Kingsway Re­tail Park in Dundee.

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