Tesco/Booker merger referred for “in-depth” investigation

The UK’s Competition and Markets Authority (CMA) has announced that the proposed merger between Tesco and Booker is being referred for an in-depth, phase 2 investigation. The CMA opened its phase 1 investigation in May and at the end of June the companies formally requested a “fast track” referral to the next stage of the investigation.

In a statement issued today (12 July) , the authority commented: “The CMA believes that in more than 350 local areas where there is currently an overlap between Tesco shops and Booker-supplied ‘symbol’ stores, shoppers could face worse terms when buying their groceries.

“There are concerns that, after the merger, there is potential for Booker to reduce the wholesale services or terms it offers the ‘symbol’ stores it currently supplies, in order to drive customers to their local Tesco.

“Other concerns were raised and considered in the CMA’s phase 1 investigation but the CMA has not found it necessary to conclude on all of these concerns given the ‘fast track’ referral.

“The investigation will now pass to a new set of decision makers – an inquiry group chosen from the CMA’s independent panel members.

“This group will assess whether the deal could reduce competition by conducting further research and analysis as well as seeking views and evidence from all those potentially affected by the merger.

“The statutory timetable for the in-depth phase 2 investigation is 24 weeks, which means the final report will be published before Christmas – following an earlier provisional findings report.”

A tie-up between Tesco and Booker could have a significant impact on the UK’s parcel delivery business.

Booker not only has an extensive food wholesale network but it also has the Premier, Budgens and Londis chains of convenience stores.

Collectively, these chains encompass around 4,000 stores.

Tesco itself already has about 3,500 stores.

So if the Tesco/Booker merger goes ahead, Tesco could end up with a network of almost 8,000 stores which could be used as click and collect points.