The UK Competition and Markets Authority (CMA) has published its final findings on the potential competition effects of the merger between Tesco and Booker, the UK's largest grocery retailer and the UK's largest grocery wholesaler respectively. Reiterating the findings of the provisional report in November, this report gives the formal go-ahead for the deal, which will create a business with joint sales over £61bn. Following submission to shareholder approval in February, it is expected the deal will complete in March 2018.
No remedies required
Following the conclusions reached in the provisional report the CMA has not identified any disposals, of other actions from the parties necessary to progress the tie-up. In its analysis the CMA points to the 'vertical' nature of the relationship between Tesco and Booker, reasoning that being retailer and wholesaler respectively, "there is very little direct head-to-head competition between them", and suggests that rather than damaging competition these sorts of mergers even "may lead to efficiencies which may result in benefits to customers."
Collapse of P&H requires no change to decision
Following the fall of, Booker competitor, Palmer & Harvey into administration on 28 November (after the publication of the provisional findings) the CMA has considered what this has meant for the inquiry, and for competition at the wholesale level. It has concluded that as significant alternative options of alternative supply remain to all P&H's former customers, the impact of the collapse on the wholesale market is not sufficient to require the reconsideration of its provisional decision on the merger.
Simon Polito, Chairman, CMA inquiry group said:
"We have carefully listened to feedback from retailers and wholesalers who operate in what are highly competitive UK retail and wholesale sectors. Retailers have told us that they shop around for the best prices and service from their wholesaler, and we are confident this will continue after Tesco buys Booker."