CMA gives Tesco's £3.7bn Booker takeover the all clear

The CMA is to prepare a final report on the proposed Tesco Booker merger

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

The landmark merger between Tesco and the UK's largest wholesaler has been given the provisional go ahead from the Competition Markets Authority (CMA).

The regulator had reviewed whether the deal could result in higher prices for shoppers in more than 350 areas where there is an overlap between Tesco's supermarkets and Booker-supplied "symbol" convenience store chains, including Londis and Budgens.

"My only concern would be for local suppliers that supply Bookers, will Tesco dictate what price they are willing to pay for their goods and squeeze their margins even more", says Patel.

The CMA argued it was likely Booker would be able to negotiate better terms from a number of its suppliers for some of its groceries - but that the wholesaler was likely to pass on some of the benefits of these savings to the shops that it supplies.

The watchdog also ruled that the move was unlikely to increase prices or reduce services in locations with both a Tesco and a Booker-supplied supermarket due to the strong competition that exists in both the grocery wholesale and retail markets.


"This might increase competition in the wholesale market, as well as reducing prices for shoppers".

Those opposing or supporting the deal have until "early December" to try and influence the deal through writing to the CMA.

Yesterday, The Co-op, the UK's sixth-largest food retailer, took a step nearer buying the local convenience-store and wholesale business Nisa after winning the support of its target's members.

Retail analyst Bruno Monteyne at Bernstein said the tie-up would make Tesco "not only the biggest grocer in the United Kingdom but also one of the fastest growing food retailers in the United Kingdom for many years to come".

In a note to clients, Black wrote: "Congratulations to Dave Lewis, Charles Wilson and their advisors on seeing off the UK Competition & Markets Authority (CMA) and so gaining tacit approval for their merger, which should complete in early 2018, as the management always guided".

He said: "With a higher shareholder hurdle and the Tesco share price below the level of when the bid was made - around £2 - Booker shareholders may argue for a higher share price".

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