The U.K. Competition and Markets Authority provisionally cleared a merger between Great Britain's number one grocer Tesco, and wholesaler Booker, noting that the level of competition in their respective markets is sufficient to counterbalance any rise in prices or reduction in service levels.
The regulator said that the two companies don't compete head-to-head in most of their activities, stressing that Tesco doesn't supply the catering sector where Booker makes more than 30% of its sales.
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The U.K. regulatory body referred the merger for further investigation in July as it believed the deal could lead to worse terms for shoppers.
On May 31 the authority said that it would investigate Tesco's proposed 3.7 billion-pound ($4.3 billion) cash-and-stock offer for Booker. The deal, announced in January, would combine the U.K.'s largest retailer with the country's largest food wholesaler, a surprise move that could bring hefty cost savings for the supermarket operator.
"Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers," Simon Polito, chair of the regulator's inquiry group, said Tuesday.
In response, Tesco said that it welcomed the announcement and that it would work with the regulator as it prepares its final report, due by the end of the year.
Tesco expects to complete the merger in early 2018.
(END) Dow Jones Newswires
November 14, 2017 03:42 ET (08:42 GMT)