The proposed merger between supermarket giant Tesco and wholesaler Booker is to be subjected to an in-depth probe, UK competition authorities said today.
The Competition and Markets Authority (CMA) says there are ‘concerns’ over the proposed £3.7bn deal.
The CMA said there are 350 areas where there is an overlap between Tesco shops and Booker-supplied independent stores.
The CMA does not identify the areas in question, but it is thought that East Anglia, Wales, and the South East would be most affected. CMA said the deal could be bad for shoppers in those areas because of reduced competition.
The CMA said that if the deal were to go through, potentially, Booker could offer inferior wholesale terms to the stores it currently supplies, ‘in order to drive customers to their local Tesco’.
Last month, Tesco and Booker asked the UK competition regulator to fast-track its investigation, from a basic Phase 1 investigation to a more in-depth Phase 2 inquiry, which has now been confirmed.
The CMA added that other competition concerns had been ‘raised and considered’ during its initial Phase 1 investigation, and would be given greater attention in Phase 2.
The statutory timetable for the in-depth Phase 2 investigation is 24 weeks, which means the final report will be published before Christmas.
The CMA could force Tesco to sell stores if it believes the deal will harm competition within the industry.
When the takeover was announced back in January, Tesco and Booker said they did not expect the deal to be completed until late 2017 or early 2018, suggesting both companies expected this kind of scrutiny from the watchdog.