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Booker-Makro deal referred to Competition Commission

CASH and carry operator Booker's £140m acquisition of loss-making Irlam-based Makro, has been referred by the Office of Fair Trading to the Competition Commission for a full investigation.

In referring the deal to the CC, the watchdog said it had concerns the link-up could reduce competition between cash and carry outlets.

Booker and Makro are both major national cash and carry wholesalers to independent retailers and caterers. The cash and carry market is worth an estimated £11bn in the UK.

The OFT's investigation found that the acquisition raised competition concerns at the national level because both companies are close competitors in the supply of grocery products to caterers.

It said: "The OFT has found that many caterers rely on cash and carry outlets. The merger brings together two close cash and carry competitors and reduces the number of national operators from four (Booker, Makro, Bestway and Costco) to three."

As well as the national question, the OFT has found competition concerns in 13 local areas where the parties overlap.

Amelia Fletcher, the OFT's chief economist and decision maker in the case, said: "'This merger brings together two of the main cash and carry wholesalers in Great Britain. This is a sizeable market which provides a key service to the independent retail sector and to a variety of catering businesses.

"We are concerned that the loss of rivalry due to the merger may result in higher prices or a reduction in service to both retailers and caterers, and ultimately to consumers.

"Although the parties did offer to divest some outlets to address some local area concerns, it was not sufficient to remove our competition concerns at the national level or indeed all of the local areas in which we have concerns."

This move will delay the integration of the Booker takeover well into next year.

Booker said last month: "If the matter is referred to the Competition Commission, its review would take approximately six months and we will be required to continue to hold Makro separate during this period."

Makro was previously owned by German group Metro AG and trades from 30 sites.

Responding to thte OFT's statement Booker said it "looks forward to working with the Competition Commission through the inquiry."

Source : Chris Barry - TheBusinessDesk.com
www.thebusinessdesk.com/northwest/news/393932-oft-s-competition-concerns-over-booker-makro-tie-up.html

09 November 2012
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