Tesco: The Gruffalo of grocery gets provisional clearance to Booker its big deal

The Competition & Markets Authority says it doesn't think the retailer's merger with wholesaler booker will damage competition

Tesco boss David Lewis and his opposite number at Booker Charles Wilson (Tesco)

Tesco’s big Booker deal looks like it can safely be booked.

The Competition & Markets Authority (CMA) has provisionally cleared the retailer’s £3.7bn buy up of the wholesaler, which supplies independent retailers including members of the Budgens and Londis chains, plus a large number of caterers.

The Gruffalo of grocers is getting bigger, and there’s no big bad mouse around to frighten it off with David Lewis at helm.

There is still the chance for rivals to throw some bricks in an attempt to block up its cave before it gets up and frightens the life out of the retail forest.

But judging by the tone of the comments made by the CMA’s inquiry group, they’ll have to be very well aimed.

Their report notes that Tesco doesn’t currently supply the catering sector, which accounts for some 30 per cent of Booker’s sales.

There are 12,000 sites where Tesco stores compete with those supplied by Booker, and where there is therefore a risk that the merged company might be tempted into bad practice; raising prices to the stores it supplies, reducing service levels etc.

Such behaviour would appear unnecessary for a best as big as the, erm, Tesc-alo. It shouldn’t need to resort to dirty tricks, sorry, uncompetitive practices. But big beasts often do that.

The CMA, however, says any attempt should be stopped in its tracks by dint of the fact that the grocery sector is so brutally competitive. Even its Gruffalo will have to play nice if it wants to survive.

Indeed, the CMA concludes that the vast buying power of the combined business might ultimately serve to enhance competition and reduce prices for shoppers currently feeling an inflationary pinch.

So, you other wholesalers, unless you’ve got something really good, go back to your lairs and get yourselves ready! Tesco-Booker accounts for less than 20 per cent of the market, so you shouldn't be overly concerned. We're not!

I still wouldn’t blame the small fry - whether in retail or wholesale - for shivering at this point. Same for those who’re going to be charged with supplying this behemoth.

It’s true that a number of Tesco shareholders have expressed opposition to the £3.7bn deal. The price is too rich for their liking, and they’d rather Mr Lewis focus his energies on the core business, which is not all that long removed from the retail sick list.

But they too are likely going to have to lump it. Mr Lewis wouldn’t have got to this point if he wasn’t sure that he had enough support to win the day.

He’s now taken the most important step towards securing the first big corporate move made by the group since the departure of Sir Terry Leahy back in 2011.

If he can make it fly, it surely won’t be the last. So what’s next on the menu?