Tesco purchase of Booker set for in depth investigation

Tesco purchase of Booker set for in depth investigation

UK competition authorities have confirmed that the purchase of Booker by Tesco will be subjected to an in-depth investigation.

The Competition and Markets Authority (CMA) says they have a number concerns ahead of the supermarket giant’s £3.7bn purchase of the wholesaler.

One of the primary concerns held by the CMA is that there are 350 areas in which there is an overlap between Tesco stores and Booker-supplied independent retailers. They believe that the deal could reduce competition, as Booker could potentially offer poor deals to these independent stores “in order to drive customers to their local Tesco”.

Tesco and Booker had asked the regulator to fast-track the investigation from a less in-depth Phase 1 investigation to a more thorough Phase 2 inquiry.

The timetable for the Phase 2 investigation in 24 weeks, with the report being published shortly before Christmas.

Booker is the UK’s foremost wholesaler and owns store brands of its own such as Budgens and Londis, while Tesco remains the UK’s biggest supermarket.

It is believed that Tesco could be forced to sell stores if the CMA find the deal will harm competition.

When the takeover was announced, Tesco and Booker said they did not expect it to be completed until late 2017 or early 2018, as they seemed to expect this level of scrutiny into the deal.