The Competitions and Markets Authority (CMA) has referred the proposed merger between Tesco and Booker for an in-depth investigation after concluding that shoppers could face “worse terms” in more than 350 areas across the UK.
The CMA formally opened its ‘phase 1’ investigation into the proposed merger on 30 May, with completion originally due on 25 July. However, two weeks ago Booker requested that the CMA fast-track its investigation.
In a statement announced today (Wednesday), the CMA said it believed that in more than 350 local areas where there was currently an overlap between Tesco shops and Booker-supplied symbol stores, “shoppers could face worse terms when buying their groceries”.
“There are concerns that, after the merger, there is potential for Booker to reduce the wholesale services or terms it offers the ‘symbol’ stores it currently supplies, in order to drive customers to their local Tesco,” it added.
“Other concerns were raised and considered in the CMA’s phase 1 investigation but the CMA has not found it necessary to conclude on all of these concerns given the ‘fast track’ referral.”
The investigation will now pass to a new set of decision makers – an inquiry group chosen from the CMA’s independent panel members, it said.
This group will assess whether the deal could reduce competition by conducting further research and analysis as well as seeking views and evidence from all those potentially affected by the merger.
The statutory timetable for the in-depth phase 2 investigation is 24 weeks, which means the final report will be published before Christmas – following an earlier provisional findings report.