Economy

Tesco-Booker deal provisionally cleared

Tesco-Booker deal provisionally cleared

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

But the CMA said it was clear the two firms did not now compete head-to-head in most of their activities - such as supplying the catering sector, which accounts for 30% of Booker's business.

Yesterday, The Co-op, the UK's sixth-largest food retailer, took a step nearer buying the local convenience-store and wholesale business Nisa after winning the support of its target's members.

It had earlier raised fears that more than 350 local areas where there is an overlap with Booker-supplied franchises such as Premier, Londis, Budgens and Family Shopper could face "worse terms". It examined evidence from Tesco and Booker, as well as evidence from more than 65 wholesalers, suppliers and retail chains and a survey of hundreds of retailers.

Tesco's takeover of Booker Wholesale has been confirmed by the Competition and Markets Authority without any reservations.

But on announcing its provisional findings, the CMA said Booker would be able to negotiate better terms from its suppliers for some of its groceries, and that it was likely to pass on these savings to the shops it supplies.

The competition regulator has provisionally cleared Tesco's £3.7bn deal to buy wholesaler Booker.

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"This might increase competition in the wholesale market, as well as reducing prices for shoppers".

The CMA began its investigation in May and launched an in-depth probe in July after Tesco and Booker asked for the inquiry to be fast-tracked. The regulator's final decision will then be published by December 26 at the latest.

"The risk is that just as the good ship Tesco is steadying, it gets blown off course by the Booker deal", he said.

Bruno Monteyne, an analyst for investment bank Sanford Bernstein covering Europe's food retail sector, said: "The argument that Tesco and Booker don't compete directly in the convenience market won".

When Tesco set out its rationale for the merger earlier this year, the company said: "Optimising a joint national distribution system of Tesco and Booker is expected to lead to material benefits, including sharing parts of the fleet and expanding click and collect services".

Tesco and Booker's market share prices jumped by 5.65 and 5.74 per cent respectively after the news this morning (14 November).