Tesco-Booker takeover: £3.7bn deal to buy wholesaler provisionally cleared by competition watchdog

The Competition and Markets Authority said its in-depth investigation into the tie-up found it did not raise competition concerns despite fears raised by a raft of rival wholesalers

Tesco is being sued by investors who say they lost millions after the company misled the stock market (Reuters)

Supermarket giant Tesco's £3.7bn deal to buy wholesale group Booker has been provisionally cleared by the competition watchdog.

The Competition and Markets Authority (CMA) said its in-depth investigation into the tie-up found it did not raise competition concerns despite fears raised by a raft of rival wholesalers.

The CMA said Tesco and Booker do not compete “head-to-head” in most areas in which they operate.

“In particular, Tesco does not supply the catering sector to which Booker makes over 30% of its sales,” the CMA said.

It comes despite the CMA having earlier raised fears over 350 local areas of overlap between Tesco and Booker where it feared the deal could lead to “worse terms”.

Simon Polito, chair of the CMA's inquiry group, said: “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.”

Tesco's shares rose 3 per cent after the CMA's provisional findings.

Shares in FTSE 250-listed Booker leapt 5 per cent higher.

Booker said: “We are pleased that the CMA has provisionally concluded that this transaction does not lessen competition, and will continue to work with the CMA ahead of its publication of a final decision, expected in December.

“We are grateful for the support of customers, suppliers and colleagues during this process.”

Tesco said: “Tesco welcomes the announcement from the Competition and Markets Authority that it has given provisional unconditional clearance of our merger with Booker Group.

“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.

“We will continue to work with the CMA as it prepares the final report due by the end of December.

“We anticipate completion of the merger in early 2018.”

PA