Tesco’s £3.7bn takeover of wholesaler Booker gets the regulatory all-clear

● CMA says tie-up not anti-competitive for consumers in final approval move

Supermarket giant Tesco’s £3.7 billion takeover of wholesaler Booker has been given the final green light after the regulator ruled yesterday that the deal would not be anticompetitive.

The conclusion of the indepth probe by the Competition and Markets Authority (CMA) came after some rival wholesalers had raised competition concerns.

Tesco and Booker welcomed the decision yesterday and said the deal is now expected to complete next March.

The CMA said Tesco and Booker did not compete “head to head” in most areas, in particular the catering sector, where Booker makes more than 30 per cent of its revenues. It added that it considered the impact on shops supplied by Tesco – such as Premier, Londis and Budgens – that it also competes with, but found the supermarket cannot have any direct influence.

Simon Polito, chairman of the CMA’S inquiry group, 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.”

He added that it had been an “important investigation”.

“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,” he said.

Tesco has more than 3,000 stores across the UK, while Londis and Budgens owner Booker is the country’s largest wholesaler. It supplies more than 5,000 stores under the Premier, Londis, Budgens and Family Shopper brands as well as thousands of independent retailers and caterers.

A raft of rival wholesalers have raised concerns that the deal could see Booker benefit from improved supplier terms, making it difficult for them to compete. They argued that this could eventually kill competition and see Booker raise prices to the shops it supplies.

But the CMA said Booker would be able to negotiate better terms from its suppliers for some of its groceries, and that it was likely to pass on these savings to the shops it supplies. “This might actually intensify competition in the wholesale market, leading to cheaper prices for the shoppers and caterers Booker supplies,” the CMA said.