Green light for Tesco/Booker merger

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The CMA, recognising that Tesco's shops nevertheless compete with Booker-supplied shops, considered the impact of the merger in every local area where a Tesco and a Booker-supplied shop are both present (over 12,000 shops). "That worry is compounded by a tough consumer environment, changing shopping habits and fierce levels of industry competition".

The CMA gave provisional clearance to the deal, finding that head-to-head competition in areas such as supplying the catering sector was now limited.

Tesco PLC (LON:TSCO) today said that it welcomes the announcement from the Competition and Markets Authority (CMA) that it has given provisional unconditional clearance of our merger with Booker Group PLC (LON:BOK).

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While 50% of Tesco investors must give the deal the green light, the threshold is 75% for Booker shareholders.

Booker is the country's largest wholesaler and owns Londis and Budgens as franchised outlets.

The CMA began its investigation in May and launched an in-depth probe in July after Tesco and Booker asked for the inquiry to be fast-tracked.

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A number of competing wholesalers had expressed concern that Booker would benefit from improved suppliers' terms after the merger, making it hard for them to continue to compete.

Tesco is the UK's biggest supermarket, with a market share of about 28 per cent while Booker is Britain's largest food wholesaler. The CMA has provisionally concluded that the level of competition in the grocery wholesale and retail markets would be sufficient to defeat such a strategy.

The watchdog also ruled that the move was unlikely to increase prices or reduce services in locations with both a Tesco and a Booker-supplied supermarket due to the strong competition that exists in both the grocery wholesale and retail markets.

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The regulator had been investigating whether shoppers and customers would have less choice as a result for merger.

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