The UK’s Competition and Markets Authority (CMA) has said that it is referring the proposed Tesco-Booker merger for an ‘in-depth, Phase 2 investigation’, following the completion of the Phase 1 investigation, which commenced in May.
The CMA said that there are ‘concerns’ that, following the merger, Booker may reduce the wholesale services and terms that it offers to symbol stores around the country, in order to push customers towards their local Tesco.
Store Overlap
It also believes that ‘in more than 350 local areas where there is currently an overlap between Tesco shops and Booker-supplied symbol stores, shoppers could face worse terms when buying their groceries’, according to a CMA statement.
The investigation into the merger will now pass on to an inquiry group chosen from the CMA’s independent panel members.
This group will assess whether the deal could reduce competition by conducting further research and analysis, as well as seeking views and evidence from all those potentially affected by the merger.
The Phase 2 investigation is expected to last until just before Christmas 2017.
Strategic Constraints
Commenting, Shore Capital Stockbrokers said in a statement, 'For Booker, we reiterate our view that the merger highlights the strategic constraints facing the stand-alone group over the medium to long term, and with ongoing risks to the final outcome, we retain our SELL recommendation.
'That said, with a combined UK store base of c8k, we concede the investigation of 350 areas (does this mean 350 stores?) appears to be somewhat less onerous than a worst-case scenario.'
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
