The Office of Fair Trading (OFT) today (Thursday) announced it is referring Booker’s acquisition of rival cash and carry group Makro to the Competition Commission amid “concerns that it could reduce competition between cash and carry outlets”.
Booker agreed to buy the struggling Makro in a £140m deal earlier this year, however in a statement issued today, the OFT said the takeover raised competition concerns at the national level and evidence showed the two were close competitors when it came to supplying caterers.
“The OFT has found that many caterers rely on cash and carry outlets. The merger brings together two close cash and carry competitors and reduces the number of national operators from four (Booker, Makro, Bestway and Costco) to three,” said the OFT.
It continued: “Additionally, the OFT has found competition concerns in 13 local areas where the parties overlap. This finding was based on the results of a survey of around 4,000 customers across 22 local areas, as well as other evidence including area-specific analysis. On the evidence available, the OFT considered Booker and Makro to be close competitors in these 13 local areas and could not be confident that suppliers in alternative distribution channels such as delivered or specialist wholesalers would provide sufficient competition to prevent Booker from raising prices or reducing service for both caterer and retailer customers across these local areas.
The OFT also considered the possibility that there may be competition concerns arising from the merger in other local areas, or at the national level for sales to retailers.
If Booker was annoyed by the OFT’s decision it wasn’t letting on. A short statement on its website said: “Booker looks forward to working with the Competition Commission through the inquiry. Makro UK will continue to be held separate from the rest of Booker until the inquiry is complete.”
For the full OFT statement go to: http://www.oft.gov.uk/news-and-updates/press/2012/101-12