Tesco’s £3.7bn Booker takeover given the all-clear

TESCO’S £3.7bn takeover of wholesaler Booker has been fully cleared by the UK’S competition watchdog despite widespread concern that the deal will hand the supermarket an even greater grip on the market.

The grocer stunned industry observers in January when it first announced the deal, which many thought would require significant concessions or a disposal of Tesco’s One Stop convenience chain to win competition approval.

However, the Competi- tion and Markets Authority (CMA) has announced, following a seven-month review, that it has concluded the deal does not raise competition concerns and has rubber-stamped the decision. The CMA justified its decision by saying that Booker does not own the shops it supplies, such as Londis, Budgens, Premier and Happy Shopper. “So although these shops compete with Tesco, Booker cannot directly determine how they compete,” the authority said.

The CMA reached this decision despite evidence from rival wholesalers about the amount of stock shop owners are obliged to buy from Booker to keep one of its brands above the door.

The watchdog said that during its investigation it found a quarter of so-called “symbol” group retailers and a third of independent shops switched wholesalers at least once a month.

The CMA said that it had considered concerns that Booker would be able to use Tesco’s buying power to purchase groceries at a lower price, which would mean other wholesalers could not compete and eventually lead to Booker raising its own prices, free of competition.

But the CMA has concluded that the wholesale market will still remain competitive and that Booker’s share of the grocery wholesaling sector is “not sufficient to justify these long-term concerns”.