Tesco's £3.7 billion takeover of Booker has been approved

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The CMA pointed out that Tesco did not supply the catering sector, which makes up 30 per cent of Booker's sales.

The move comes ahead of the Competition and Markets Authority's (CMA) final report due by the end of the year.

But the CMA said it was clear the two firms did not now compete head-to-head in most of their activities - such as supplying the catering sector, which accounts for 30% of Booker's business.

Supermarket giant Tesco's £3.7 billion deal to buy wholesale group Booker has been provisionally cleared by the competition watchdog.

A raft of rival wholesalers have also raised concerns the deal could see Booker benefit from improved supplier terms making it hard for them to compete, according to the CMA. They argued that as a result, in the longer term, Booker might be able to raise prices to the shops that it supplies.

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Booker's increased clout would potentially allow it to negotiate better terms from its suppliers, which could be passed on as lower prices to the shops it supplies, the investigation found.

The CMA said the competitive landscape looked generally rosy because Booker had less than a 20% share of the United Kingdom grocery wholesaling market.

A panel made up of CMA members found that after the companies "do not compete head-to-head in most of their activities".

The CMA opened its phase one investigation into the merger in May.

"We are grateful for the support of customers, suppliers and colleagues during this process".

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In a brief statement, Tesco welcomed the CMA news, adding that it expected the Booker takeover to complete in early 2018.

The decision is subject to a final decision next month following a consultation on the CMA's findings.

Molly Johnson-Jones, senior retail analyst at GlobalData, said: "The food & grocery market should be anxious, but it won't be impossible to survive given that product differentiation, foodservice, other services, and location are key in the convenience market".

Tesco unveiled the blockbuster deal in January in a bid to become the nation's top food business, slash costs and take on German-owned discount retailers.

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