Tesco’s £3.7bn merger with Booker has been given the provisional go ahead by the Competition and Markets Authority (CMA).

The authority began investigating the merger of the UK’s largest grocery retailer and the UK’s largest grocery wholesaler in May to examine how it would affect competition.

In a statement today, Simon Polito, chairman of the inquiry group, said: “Millions of people use their local supermarket or convenience store to buy their groceries or essentials. Strong competition in the market ensures that shoppers can choose the best deal for them.

“Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers.”

At the start of the year the partners said the merger was expected to enable opportunity for cost synergies of at least £175m, mainly in areas such as procurement and distribution.

Read more

Approximately 35% of these cost savings (£61m) will come from distribution and fulfillment activities where “identified cost synergies” in logistics and deliveries would lead to improved services and standards.

Optimising a joint national distribution system of Tesco and Booker, the statement said, is “expected to lead to material benefits” and will include sharing parts of the fleet and expanding click and collect services. Tesco also anticipates savings in relation to final mile deliveries.

The finding is provisional and the CMA is inviting further comment ahead of a final decision.

Topics