The Competition and Markets Authority (CMA) in the UK has today provisionally given unconditional clearance to the anticipated acquisition of Booker Group plc (Booker) by Tesco plc (Tesco). Tesco is predominantly a grocery retailer with operations in the UK, Europe and Asia. Its UK groceries operations include grocery retailing and the wholesale supply of symbol group services through franchised One Stop stores. Booker is a grocery wholesaler with operations in the UK and India. It operates both cash-and-carry and delivered wholesale services. Frontier is advising both Tesco and Booker on the merger clearance aspects of its acquisition.
The CMA began an in-depth Phase 2 investigation in July 2017, following a first phase investigation of the Merger. During this Phase 1 investigation, the parties requested that the CMA accelerate a reference of the investigation to the phase 2 under the CMA’s ‘fast track’ procedure. The provisional conclusion of the CMA’s Phase 2 investigation is that the merger is not expected to result in a substantial lessening of competition within any market for goods or services in the UK.
The CMA concluded that competition would not be lessened between either Booker symbol group stores or Booker’s independent convenience store customers on the one hand and Tesco stores on the other hand as a result of Booker worsening its wholesale services. This is because the merged firm would continue to face sufficient competition from other retailers and wholesalers in all local areas affected by the merger. It also concluded that the merged entity would not have increased buyer power in a way that would be detrimental to consumers.
Tesco and Booker first announced the merger in January 2017. The CMA is expected to publish its final report by the end of December 2017.
Frontier Economics advises Tesco and Booker on issues of strategy, planning and competition policy.
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