Tesco's Booker Deal Faces In-Depth Probe on Overlap Concerns

  • CMA says grocers have overlaps in 350 U.K. neighborhoods
  • In-depth review should be finalized before end of year

The Competition and Markets Authority said that shoppers in more than 350 local areas could face worse terms when buying groceries where there is an overlap between Tesco shops and Booker-supplied 'symbol' stores.

Photographer: Simon Dawson/Bloomberg

Tesco Plc faces an in-depth probe into its 3.7 billion-pound ($4.75 billion) bid for food wholesaler Booker Group Plc after regulators expressed concerns that the deal could leave shoppers worse off.

The Competition and Markets Authority said that shoppers in more than 350 local areas could face worse terms when buying groceries where there is an overlap between Tesco shops and Booker-supplied stores operated by independent retailers under the Premier, Londis, Budgens and Family Shopper brands.

The CMA said that there are concerns the deal could enable Booker to reduce the wholesale services or terms it offers the stores it currently supplies, in order to push customers to their local Tesco.

Adding Booker would bolster Tesco in convenience stores and restaurant supply operations at a time when its supermarkets face growing pressure from e-commerce giant Amazon.com Inc. and price competition from discounters Aldi and Lidl. Tesco rival J Sainsbury Plc last year bought Argos, a household-goods chain, for 1.2 billion pounds to strengthen its non-food offering.

The statutory timetable for an in-depth review is 24 weeks, which means the final report will be published before the end of the year following an earlier provisional report, the CMA said. The companies last month sought a “fast track’ referral to the next stage of the investigation.

Tesco said it’s “pleased” the CMA agreed to fast track the probe and will to continue to cooperate with regulators.

“This merger has always been about growth, and we remain convinced that it will bring benefits for consumers, independent retailers, caterers, small businesses, suppliers and colleagues,” Tesco said in an emailed statement.

— With assistance by Paul Jarvis

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