Tesco won provisional approval for its proposed £3.7 billion ($4.9 billion) takeover of wholesaler Booker from the UK competition regulator on Tuesday, moving Britain's biggest retailer closer to securing a new avenue of growth.
The Competition and Markets Authority (CMA) said, after conducting an in-depth review, that it had provisionally concluded that Tesco's purchase of Booker does not raise competition concerns.
Tesco as a retailer and Booker as a wholesaler supplying caterers and independent retailers including Premier, Londis and Budgens, do not compete head-to-head in most of their activities, the CMA said.
In particular, it found that Tesco does not supply the catering sector to which Booker makes over 30 percent of its sales.
"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," said Simon Polito, chair of the CMA's inquiry group.
The CMA is now inviting further comment and evidence before coming to a final view, it said.