It was no surprise that the Competition and Markets Authority cleared Tesco’s £3.7bn takeover of Booker, but that it did so without asking for any remedies has shocked many. Here is how the industry has been reacting today
John Mills, Landmark Wholesale MD:
“We are incredibly disappointed with the CMA’s decision. This move will not increase competition, it will destroy it. The combined Tesco/Booker business has sales of £60bn while the rest of the UK wholesale industry amounts to £25bn. Other wholesalers will not be able to compete with the buying and distribution power of Tesco/Booker. As a result of this decision, Tesco, which currently accounts for £1 in every £8 on the high street, will dominate the convenience and corner shop market and will undoubtedly now dominate the foodservice/out-of-home market as well.
“We believe that there is a risk that thousands of jobs will disappear from family-run foodservice wholesalers and independent stores, and the net impact will reduce choice for consumers and communities, a point that seems to have been totally lost to the CMA.
“The challenge is now for Landmark, and others, to work harder than ever to find better, smarter and more efficient ways of buying and working. We will continue to work closely with our members to ensure that we provide them with the best possible trading platform to compete in this changing and increasing competitive marketplace.”
Philip Jenkins, Sugro UK MD:
“I think we all expected it to be approved but obviously we would have preferred some restrictions. The CMA has said it expects the wholesale market to remain competitive in the long term - but this completely ignores the 14% price differential between the major supermarkets and the wholesale sector, which was identified by the CMA in its supermarkets investigation in 2008.
“This allows a company with the scale of Tesco and Booker to target local markets and a big proportion of the market will not be able to compete.
“However at the same time I have to give a huge amount of congratulations to the guys at Booker. When you consider what a mess Booker was in when Charles Wilson joined and how the hard work he and his team put in to turn that business around to now being bought for £3.7bn by Tesco - it’s probably the definitive business turnaround story of our time. Business students will be writing about it in their degrees for years to come. “You just have to say wow, absolutely amazing, fantastic.”
Andrew Thornton, Thornton’s Budgens:
“I think this is good news - our sector is becoming more and more competitive, with endless cost and margin pressure. For Booker to have access to the Tesco supplier terms will help us as independents with keeping competitive and generating the additional margin needed to cover increasing costs. Historically I would have had a moral issue with how Tesco have behaved, however, I know Dave Lewis is committed to changing their culture and how they operate.”
Steve Parfett, AG Parfett & Sons:
”I’ve never been bothered about the horizontal competition implications but in terms of the vertical implications it seems to me that the CMA doesn’t understand the impact of this deal in practice or does not want to understand it. The two market definition has become redundant and by sticking to it allows for the possibility of abuse of power to occur. Allowing this deal through will have very unfortunate consequences.”
Darren Goldney, Today’s Group MD:
“While we are disappointed in the provisional CMA position regarding Booker and Tesco, our growing and diverse membership has a track record of continually evolving and adapting to change. The desire and increased capabilities in building long term, sustainable partnerships with both customers and suppliers has and will remain our focus.”
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