Final CMA approval given for Tesco/Booker merger

Tesco store

Tesco’s takeover of Booker has been given the go-ahead by the Competition and Markets Authority (CMA).

This follows the competition watchdog’s examination of all the submissions it received since the deal was given provisional clearance in November.

The CMA concluded that Tesco, as a retailer, and Booker, as a wholesaler, do not compete head-to-head in most of their activities.

It also decided that, although Booker supplies shops that do compete with Tesco, the wholesaler couldn’t directly influence this competition as retailers are free to set their own prices and choose which lines to stock.

As part of its investigation, the CMA surveyed hundreds of retailers which showed that most shops use more than one wholesaler and frequently switch. A quarter of symbol group retailers and a third of independent shops switched at least once a month.

In addition, almost half of symbol group retailers surveyed and more than a third of independent retailers said that if Booker were to raise prices after the merger with Tesco, they might stop buying from Booker altogether. And only around a fifth would continue buying the same volumes from Booker, alongside their other wholesalers.

Given Tesco’s influence generally in the retail sector, the CMA also examined whether the merged company could raise prices or reduce service quality at either the wholesale or retail levels. It found that existing strong competition in wholesale and retail made this unlikely.

The CMA also noted that if Booker could get keener prices for its goods from suppliers, this might actually intensify competition in the wholesale market, leading to cheaper prices for the shoppers and caterers Booker supplies.

Simon Polito, Chair of the 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.

“This has been an important investigation for us. 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.”