The UK government’s Competition and Markets Authority (CMA) has announced that it to refer the proposed merger between Tesco and Booker to an in depth, phase 2 investigation.

The phase 1 investigation was opened by the CMA in May and at the end of last month the two companies formally requested a fast track referral to phase 2.

In a statement, the authority commented: “The CMA 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.

“There are concerns that, after the merger, there is potential for Booker to reduce the wholesale services or terms it offers the ‘symbol’ stores it currently supplies, in order to drive customers to their local Tesco.

“Other concerns were raised and considered in the CMA ’s phase 1 investigation but the CMA has not found it necessary to conclude on all of these concerns given the ‘fast track’ referral.

“The investigation will now pass to a new set of decision makers – 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 statutory timetable for the in-depth phase 2 investigation is 24 weeks, which means the final report will be published before Christmas – following an earlier provisional findings report.”

For consumers and competitors alike the tie up between Tesco and Booker could have a major impact on the parcel delivery sector. Because Booker owns three major convenience store chains (totalling 4000 stores) this could be a major click & collect opportunity for Tesco. It would also add to Tesco’s existing 3500 stores and have a major impact on the UK high street.

 
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