Wholesalers weigh up appeal on Tesco-Booker merger

Tesco-Booker merger

The bosses of seven of the UK’s biggest grocery wholesalers have put aside their competitive differences to consider lodging an appeal on the final approval of Tesco’s £3.7 billion takeover of Booker.

Yesterday, the Competition and Markets Authority (CMA) gave the final go-ahead for the merger between the UK’s biggest grocer and the biggest grocery wholesaler and convenience store operator – arguing that its probe did not find any competition concerns despite fears raised by rival wholesale groups.

In October, the bosses of seven of the UK’s largest wholesalers jointly wrote to the CMA arguing the deal would hand Tesco “incontestable power over the procurement of all grocery categories in the UK”.

The chairman of wholesaler AG Parfett & Sons, Steve Parfett, said the CMA’s final verdict was disappointing.

“The whole decision is perverse,” he said.

Parfett’s firm is part of the Landmark Wholesale buying group, which was one of the seven signatories to the CMA letter in October.

He said several members of that group were now discussing obtaining legal opinion on whether to appeal.

They have also sought the support of MPs in the constituencies where Booker has depots.

Aggrieved parties have a month to lodge a case with the competition appeal tribunal.

The CMA’s verdict this week follows the provisional go ahead that was provided in November after an investigation that was launched in May amid criticisms from across the grocery and convenience sector.

The competition watchdog said Tesco and Booker do not directly compete with each other in most sectors in which they operate, especially the catering sector, which is the source of more than 30 per cent of Booker’s sales.

The CMA also said it “carefully” considered the impact on competition on convenience grocery stores supplied by Tesco – such as those that fall under Premier, Londis and Budgens chains – but found the Big 4 grocer cannot have any direct influence.

“We have carefully listened to feedback from retailers and wholesalers who operate in what are highly competitive UK retail and wholesale sectors,” said Simon Polito, the chair of the CMA’s inquiry group investigating the merger.

“Retailers have told us that they shop around for the best prices and service from their wholesaler, and we are confident that this will continue after Tesco buys Booker.”

He added: “Millions of people use their local supermarket or convenience store to buy their groceries or essentials, so it is vital that they have enough choice to secure the best deal for them,” Polito said.

“Having examined the evidence in depth, we are satisfied this will remain the case following the merger.”

The merger also follows the collapse of wholesale Palmer & Harvey, which plunged into administration this month,

Meanwhile, Nisa recently agreed to a £143 million takeover by the Co-op.

Tesco and Booker welcomed the CMA’s verdict and said the deal is now expected to complete next March.

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