Seven of the UK’s leading wholesalers have written a joint letter to the Competition and Markets Authority (CMA) urging it to block the Tesco-Booker merger.
The managing directors of Bestway, Bidfood, Confex, Landmark, Spar, Sugro and Today’s co-signed a letter, which was submitted to the CMA as part of its ongoing Phase 2 investigation.
The letter refutes the claim that Tesco’s acquisition of Booker will enhance competition in the UK and promote consumer interests.
The group have told the CMA of the consequences if Booker acquires Tesco’s unrivalled power in grocery procurement. This would harm suppliers and result in higher prices and less choice for independent retailers and consumers.
Adding that, Tesco, with its ability to target lower prices where it faces local competition, would also have the power to force out of business all those independent retailers with which it competes locally.
The CMA is in Phase 2 of its investigation into Tesco proposed acquisition of Booker. It is expected that the CMA will issue its Provisional Decision towards the end of October 2017.
In the letter, the directors state: “If this merger proceeds, we anticipate that Tesco will undermine the ability of those of us that supply this sector to compete here also. Tesco will leverage its supermarket buying power into this market by, for example, making its purchases for supermarkets conditional on good terms on foodservice supplies. The result, once again, will be that competitors will suffer poorer terms on price, delivery and availability.
“Is this fair competition? We say not. This position will have been brought about by the leveraging of Tesco’s dominant supermarket buying power into the wholesale, symbol and foodservice sectors.
“Will the consumer benefit? Perhaps in the shorter-term prices will drop while Booker and Tesco attract new wholesale, symbol, retail and foodservice business. Over time, however, as competition is weakened and eliminated, normal economics will prevail and Tesco/Booker will raise its prices to its convenience and foodservice buyers. Once again, though, the harm goes beyond price. Consumers will experience a reduction in choice of store, product range, opening hours, etc.”
Better Wholesaling reached out to Booker for comment, the group said: “We look forward to continuing our constructive engagement with the CMA as the issues and the benefits of the merger are examined in more detail. This merger has always been about growth, and as laid out in the Statement of Case we remain convinced that it will bring benefits for independent retailers, caterers, small businesses, suppliers, consumers, and colleagues. We look forward to continuing our engagement with the CMA over the coming months. We are grateful for the support of customers, suppliers and colleagues during this process.”