The £3.7 billion merger between Tesco and Booker has been formally cleared by the Competition and Markets Authority (CMA).
The decision follows an in-depth examination of evidence from multiple wholesalers, suppliers and retail chains.
Tesco, as a retailer, and Booker, as a wholesaler, do not compete head-to-head in most of their activities, CMA said. But as Booker suppliers outlets such as Premier, Londis and Budgens, which do compete with Tesco, the watchdog said it had considered the impact of this carefully.
It said that as Booker does not own the shops it supplies and these retailers are free to set their prices and decide which products to stock, although they do compete with Tesco, Booker cannot directly determine how they compete.
In context of Tesco’s influence as the UK’s largest retailer, the CMA said it looked at whether the merged company could affect prices, but found that existing strong competition in wholesale and retail made this unlikely.
During the phase two investigation, CMA found that most retail shops involved frequently switch between wholesale suppliers, while half of those questioned said that if Booker raised its prices they would stop buying from the company.
Chair of the inquiry group, Simon Polito, said: “We have carefully listened to feedback from retailers and wholesalers who operate in what are highly competitive UK retail and wholesale sectors.
“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.'
