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UK competition authority refers Tesco-Booker deal to phase 2

Staff Writer |
The UK Competition & Markets Authority said on Wednesday it has referred the proposed merger between supermarket giant Tesco PLC and wholesaler and convenience-store operator Booker Group PLC for an in-depth phase 2 investigation.

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The CMA opened its phase 1 investigation into the merger in May, before Tesco and Booker in late June requested a "fast-track" referral to the next stage.

Tesco plans to buy Booker for GBP3.70 billion, in a deal announced earlier this year.

The CMA said on Wednesday it 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, the CMA said.

Other concerns were raised, but the CMA said it has not found it necessary to conclude on those concerns given the fast-track referral.

The investigation will now pass to a new set of decision makers, comprising 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 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.


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