Symbol groups could face margin squeeze over Tesco-Booker deal

Booker symbol group retailers may be expected to swallow any cost increases that result from the company’s planned merger with Tesco. 

The Competition and Markets Authority (CMA), who are investigating the deal, said that Tesco and Booker expected 50% of any increase in goods costs to be absorbed by retailers.

They went on to say that while Booker may have some influence over retail prices beyond contractual terms, the CMA believed a “vast majority” of symbol group retailers would pass price rises on to their customers.

The CMA’s view was backed up by Mike Howe, owner of Mills & Son Londis in Exeter. Speaking to Retail Express, he said: “Every penny of it will be passed on.”  

The report found that independents and symbol retailers were especially vulnerable to price increases due to the complexity of changing symbol groups, minimum purchase requirements and low availability of rival wholesalers in some areas.  

A Booker spokesperson said: “The CMA has raised a number of questions and issues regarding our planned merger with Tesco. We look forward to continuing our constructive engagement with the CMA as these issues and the benefits of the merger are examined in more detail in the Phase two review process.

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

The CMA’s phase one decision report also revealed the severe threat the deal could pose to the future of Palmer & Harvey.