The UK's Competition and Markets Authority (CMA) has announced that it is clearing the proposed merger between Tesco and wholesale group Booker.
The CMA outlined in a recent statement said that, following an in-depth examination of evidence from a large number of wholesalers, suppliers and retail chains, it has concluded that the deal does not raise competition concerns.
Tesco as a retailer and Booker, as a wholesaler, do not compete head-to-head in most of their activities," the CMA said.
It added that Booker does not own the stores that it supplies, and so these retailers are free to set their own prices and decide which products to stock, meaning that Booker cannot directly determine how they compete with supermarket giant Tesco.
The CMA also examined whether the merged company could raise prices or reduce service quality at either whole or retail level, but concluded that existing strong competition in the sector made this 'unlikely'.
Last month saw the collapse of UK wholesale group Palmer & Harvey, which was reported to have been triggered by the Tesco-Booker deal.
The group, which supplies around 90,000 stores across the UK, said that it had been hit by challenging trading conditions in recent months, and efforts to restructure the business had been unsuccessful.
Wholesale Companies Expressed Concern
In October, a number of UK wholesale companies expressed concern over Tesco's proposed purchase, saying that the increased buying power would make it very challenging for other wholesalers to compete.
"We have carefully listened to feedback from retailers and wholesalers who operate in what are highly competitive UK retail and wholesale sectors," said Simon Polito, chair of the CMA's inquiry group.
"Retailers have told us that they shop around for the best prices and service from their wholesaler, and we are confident that this will continue after Tesco buys Booker."
© 2017 - Checkout Magazine by Donna Ahern