Tesco-Booker merger formally approved by CMA

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The proposed merger of Tesco and Booker is set to complete after gaining formal approval by the Competition and Markets Authority (CMA) this morning following an in-depth investigation.

The decision means the proposed deal, first announced in January, is now able to proceed to a shareholder vote. The decision follows the CMA’s provisional clearance of the merger in November.

Chair of the inquiry group Simon Polito 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.”

The CMA found that the merger did not raise competition concerns on the basis that Booker did not own the shops it supplies. These retailers are free to set their prices and decide which products to stock, it added.

Therefore, although these shops compete with Tesco, Booker cannot directly determine how they compete, it said in a statement today.

The competition authority considered the impact of the merger in every local area where a Tesco and a Booker-supplied store co-existed. It concluded that, in a scenario in which the merged company raised prices or reduced service levels in retail or wholesale, the level of competition would be sufficient to defeat such a strategy.

In response to the CMA’s annoucement, Booker said in a statement: “Booker welcomes the announcement from the Competition and Markets Authority that it has given unconditional clearance of the company’s proposed merger with Tesco PLC.

“Subject to the approval of the Court, it is expected that the scheme circular will be published by Booker during the week commencing 5 February 2018. Subject to the approval of the UK Listing Authority, it is expected that the Tesco shareholder circular and prospectus will be published at the same time.”

A spokesman for Tesco added: “We anticipate respective shareholder meetings towards the end of February 2018, and completion in March 2018.”

Readers' comments (4)

  • Sadly this time next year there will be LESS wholesalers and LESS Cash and Carrys.As well as LESS convenience stores.

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  • I am pleased that CMA has now done the right thing and looked at the bigger picture in its conclusion, in that the greater good that will come out of the merger is more important than impacting some lesser known “cash & carry” operators. What’s more important to note is that the big competitors are going to be the German discounters and Amazon not to mention the online offerings from the mults. In order to compete, scale was critical and the “old” symbols were in no position to offer the convenience sector the quality and wholesale price that we all want in order to make the margin and compete in the high street.
    The mults have also realised that there is more money to be made by being wholesalers than retailers hence the deals that are now struck by Morrison, Coop, and Tesco/Booker with the aim of offer the best but also be able to compete with the new comers in the market. I am not in the least bit worried if there are fewer wholesalers as long as the scale that comes with it saves many retailers from going under. We also got to bear in mind that the market is changing and reasons why customers come into our shops have also changed. We need to change with the market and Booker/Tesco merger will certainly provide us with the kind of relevance offering we all need. Those that are not heeding the market and are still offering the old model will eventually fail and we can’t blame the mults for that if there are fewer shops nor can we sympathise with cash & carries which are becoming more irrelevant in their offerings to market expectation.

    Arjan Mehr Londis Bracknell

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  • Bad news all round. The CMA is not fit for purpose. The Tesco/Booker merger should never have been given the go ahead. The last thing shopkeepers, suppliers, manufacturers and the public need is another monopoly. What a sorry state of affairs.

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  • For years Tesco and the Co op have tried to destroy the independent sector. Let's all stop buying from Booker and Nisa and get our revenge, also giving a massive boost to the independent wholesale sector.

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