Tesco’s £3.7bn takeover of cash-and-carry group Booker has been given the go-ahead by the competition watchdog, which said the deal would not result in higher prices or a poorer service for shoppers.
An investigation into the deal by the Competition and Markets Authority (CMA) found that Britain’s biggest supermarket chain and Booker, owner of convenience chains including Londis and Budgens, do not compete head-to-head in most of their activities.
“Millions of people use their local supermarket or convenience store to buy their groceries or essentials. Strong competition in the market ensures that shoppers can choose the best deal for them,” said Simon Polito, chair of the inquiry group.
“Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers.”
The CMA announced in January that it was referring the deal for an in-depth investigation over concerns that the tie-up could result in higher prices for shoppers in about 350 areas across the UK.
It said on Tuesday that a group of independent CMA panel members considered the impact of the merger in every local area where a Tesco and a Booker-supplied shop were both present, totalling more than 12,000 shops. It concluded that there was sufficient competition in both the wholesale and retail markets to ensure the deal would not mean higher prices or reduced service.
Tesco operates more than 3,000 stores across the UK, while Booker supplies more than 5,000 stores under the Premier, Londis, Budgens and Family Shopper brands, as well as thousands of independent retailers and caterers.
The deal would turn Britain’s biggest retailer into a major supplier to small retailers, serving 125,000 independent convenience stores as well as 468,000 restaurants and pubs.
Tesco welcomed the decision and said the deal was expected to complete in early 2018.
The company said: “We look forward to creating the UK’s leading food business, bringing together our combined expertise in retail and wholesale. This merger has always been about growth, and will bring benefits for independent retailers, caterers, small businesses, suppliers, consumers, and colleagues.”
It is the first major corporate move for Tesco since the chain was led by Sir Terry Leahy, who quit in 2011. In recent years, the retailer has been hit by growing competitions from discount chains and an accounting scandal.
The current chief executive, Dave Lewis, was parachuted in from Unilever to turn around the business, and under his leadership Tesco reported its first year of sales growth since 2010.