The competition regulator has cleared Tesco’s £3.7bn takeover of the Booker Group after an in-depth review.
The Competition and Markets Authority said that following a seven-month investigation it has given the go ahead for the merger after concluding that it did not raise any competition concerns despite fears by rival wholesalers.
Tesco is Britain’s biggest supermarket group while Booker is the country’s largest food wholesaler.
The CMA said that Tesco and Booker did not compete “head-to-head” in most of their activities.
But it did say that it had “carefully” considered the impact on shops Booker supplies – such as Premier, Londis and Budgens – that do compete with Tesco.
“Booker does not own the shops it supplies and these retailers are free to set their prices and decide which products to stock,” the CMA said.
The CMA also noted that if Booker could get “keener” prices for its goods from suppliers, this might actually intensify competition in the wholesale market, leading to cheaper prices for the shoppers and caterers Booker supplies.
“We have carefully listened to feedback from retailers and wholesalers who operate in what are highly competitive UK retail and wholesale sectors,” said chair of the inquiry group Simon Polito.
“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,” he added.
Tesco said it expects the merger to complete in March next year, following a shareholder vote towards the end of February.
Laith Khalaf, senior analyst at Hargreaves Lansdown said Tesco had now cleared a major hurdle in its proposed tie-up with Booker, though it may yet face resistance from shareholders.
“The supermarket sector is having to re-invent itself, with Sainsbury’s taking over Argos, and Morrisons teaming up with Amazon and McColl’s, so Tesco doesn’t want to rest on its laurels while the rest of the sector moves onwards and upwards,” she said.
“However, the concern is that Tesco is trying to run before it can walk, and that a big merger like this could blow its nascent recovery off course. That worry is compounded by a tough consumer environment, changing shopping habits and fierce levels of industry competition,” she added.