Tesco’s £3.7 billion (US$5 billion) takeover of wholesaler Booker has been fully cleared by the UK’s competition watchdog despite widespread concern that the deal will hand the supermarket an even greater grip on the market.
The grocer stunned industry observers in January when it first announced the deal, which many thought would require significant concessions or a disposal of Tesco’s One Stop convenience chain to win competition approval.
However, the Competition and Markets Authority (CMA) has announced, following a seven-month review, that it has concluded the deal does not raise competition concerns.
The CMA justified its decision by saying that Booker doesn’t own the shops it supplies, such as Londis, Budgens, Premier and Happy Shopper. “So although these shops compete with Tesco, Booker cannot directly determine how they compete,” the authority said. The CMA reached this decision despite evidence from rival wholesalers about the amount of stock shop owners are obliged to buy from Booker to keep one of its brands above the door.
The watchdog said that during its investigation it found a quarter of so-called “symbol” group retailer and a third of independent shops switched wholesalers at least once a month.
Full Content: The Irish Times