The UK competition watchdog has announced the commencement of its inquiry into the proposed merger of Tesco (LON:TSCO) and Booker (LON:BOK).
The deal, announced back in January, would see Tesco merge with Britain’s largest wholesaler Booker and is set to be worth £3.7 billion.
Dave Lewis, Chief Executive Officer of Tesco, said once the deal had been announced:
“Tesco has made significant progress in turning around our UK retail business. This Merger with Booker will further enhance Tesco’s growth prospects by creating the UK’s leading food business with combined expertise in retail, wholesale, supply chain and digital. Wherever food is prepared and eaten – ‘in home’ or ‘out of home’ – we will meet this opportunity with the widest choice and best service available.”
The Competition and Markets Authority is set to investigate the deal in order to decide whether the deal with impact upon consumer choice and competition within the UK supermarkets industry.
In a statement, the CMA said it would “assess whether the deal could reduce competition and choice for shoppers and other customers, such as stores currently supplied by Booker”.
Whilst major British supermarkets have begun to feel the squeeze as budget-friendly competitors such as Aldi and Lidl continue to expand, Tesco still remains Britain’s largest supermarket with 27.6 percent market share as of the three months to March according to Kantar Worldpanel figures.
The first stage of the investigation is set to continue until the 25th of July, and it has asked that involved parties must submit their thoughts by the 3rd of June.
“During this period, the Competition and Markets Authority will assess whether the deal could reduce competition and choice for shoppers and other customers, such as stores currently supplied by Booker,” the CMA stated.
Should the Authority deem it necessary, it may require Tesco to offload stores in order to continue to ensure competition amongst supermarket retailers before it can give the go ahead.
Shares in Tesco are currently down 0.96 percent as of 15.50PM (GMT).