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Leading wholesalers urge CMA to block Booker-Tesco merger

RBR Staff Writer Published 09 October 2017

The bosses of seven largest wholesalers of the UK have urged the Competition and Markets Authority (CMA) to block the Tesco-Booker merger.

In a joint letter to the CMA, which was submitted to the regulatory authority as part of its Phase 2 investigation into the merger, the managing directors of Bestway, Bidfood, Confex UK, Landmark, Spar UK, Sugro UK and Today’s Wholesale Services opposed the Tesco’s £3.7bn takeover of Booker stating that the mega merger could threaten the survival of the independent retailer.

Refuting Tesco’s claims that the deal will increase competition and promote consumer interests, the wholesalers’ group said the takeover will affect suppliers and result in higher prices and less choice for independent retailers and consumers.

“Tesco will have incontestable power over the procurement of all grocery categories in the UK. Suppliers will find it even harder to resist Tesco’s demands,” the wholesalers, who account for 60% of the market, claimed.

Tesco already has 29% share of the grocery market, which will increase with the Booker deal, they said.

Booker will buy its products at Tesco’s prices as the wholesaler takes advantage of the supermarket’s wider purchasing power, which is the biggest threat, the wholesalers said in the letter.

The group also argues that some suppliers, particularly of branded products, will fail as they will not have access to Tesco stores and the supermarkets’ extended reach to Booker’s network of convenience shops.

But, Tesco and Booker defended the deal, stating that the wholesale market already benefits from competitive supply arrangements, which will allow independent retailers to switch easily. They said the deal will provide better choice and lower prices for customers.

However, the group said Tesco and Booker could slash prices in the short-term to weaken competition before raising prices again.

The CMA is likely to reveal its provisional findings on the Booker deal by the end of October 2017. A final decision is expected by the end of the year.