Indies may gain from Tesco-Booker merger price war

A price war with suppliers following the £3.7bn Tesco-Booker merger could play into the hands of independent retailers, RN has been told.  

The Competition and Markets Authority (CMA) announced its approval of the deal on 20 December, with the regulator concluding the merger would have no negative impact on pricing or competition. 

A number of wholesalers are now considering an appeal to the decision and say combined power will result in prices being driven down. 

However, store owners have welcomed this prospect. Retailer Raj Aggarwal, of Spar Wigston in Leicester, argued a price war would benefit independent retailers. He told RN: “Tesco isn’t the giant it used to be and suppliers follow the shoppers.

 “Tesco and Booker don’t have the option of refusing to stock goods from suppliers if they can’t get them at lower prices. Suppliers will take their business elsewhere and this can only be beneficial for independent retailers,” he added. 

Kay Patel, of Global Food & Wine in Stratford said: “If suppliers do get squeezed out, they may try to minimise damage by improving the quality and service delivered by their reps. 

“I can imagine the reps will work harder to tell independent retailers how to make the most of promotions and merchandising to boost sales. This is all good for independent retailers.”

Among those wholesalers considering an appeal is AG Parfett & Son’s chairman Steve Parfett who called the CMA’s decision “perverse and pathetic”. 

“I’m thinking of appealing to the Competition Appeal Tribunal and I would encourage others to do the same,” said Mr Parfett. “Tesco-Booker will have the combined power to demand more goods at a cheaper price from suppliers. Other wholesalers won’t be able to keep up and they’ll be wiped out. A lot of suppliers have put similar worries to the CMA, but are reluctant to come out because they fear the repercussions from Tesco.”