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The Competition and Markets authority is this week expected to unveil its provisional findings on the £3.7bn Tesco takeover of wholesaler and cash & carry operator Booker, which rocked the industry when it was announced at the start of the year.

The regulator has spent the past five months scrutinising the potential impact of the deal on consumers and the wider convenience and wholesale sectors.

Back in June, Tesco and Booker asked to speed up the process by requesting the CMA start the in-depth phase two investigation immediately.

The deal has faced heavy criticism by rivals but Tesco and Booker set out an impassioned defence of their merger plans in a 111-page dossier earlier this summer.

Tesco chief Dave Lewis and Booker boss Charles Wilson insist that fears over competition are misguided and that the combination won’t disadvantage suppliers.

But critics worry that Tesco’s grip on retail will be tightened by the addition of Booker’s Londis, Premier, Budgens and Happy Shopper convenience brands, which are owned and run by franchisees.

The CMA could recommend in its provisional decision this week that Tesco needs to sell off its One Stop chain or hundreds of its Express c-stores to ward off competition concerns.

Booker rival Bestway urged the competition authority (when it gave evidence in September) to throw out the proposed merger, claiming it will “distort” competition in the wholesale market.

And earlier this month seven of the UK’s leading wholesalers got together to ask the CMA to throw out the deal. In a joint letter, the managing directors of Bestway, Bidfood, Confex, Landmark, Spar, Sugro and Today warned the power of the merged group would give independent retailers a stark choice: join Booker/Tesco or go out of business.

Beleaguered tobacco wholesaler Palmer & Harvey, which is currently locked in rescue talks with private equity giant Carlyle, also admitted this month that it would be forced to restructure its business if it were to lose its Tesco contract.

Morning update

The Competition and Markets Authority (CMA) is considering whether the £1bn takeover of Cott’s bottling operations, which includes the business in the UK, by Refresco will lessen competition in the sector. The watchdog has invited interested parties the chance to comment on the transaction before it makes a decision whether to investigate the deal. Deadline for comment is 13 November, with a decision expected by 22 December.

The FTSE 100 retreated by 0.2% to 7,489.15 points on the troubles afflicting Catalonia over the weekend.

British American Tobacco (BAT), TATE & Lyle (TATE) and Diageo (DGE) all opened down this morning by 1.3% to 4,958.5p, 1.2% to 645p and 1% to 2,583p respectively.

Morrisons (MRW) fell 0.4% to 227.8p ahead of its third quarter update on Thursday. Tesco (TSCO) is flat at 185.5p while Booker (BOK) nudged up 0.2% to 204.1p.

Ocado (OCDO) was also up 0.6% to 283p.

This week in the City

After a quiet start, it is looking like a busy week for grocery and fmcg news at home and internationally.

Later this afternoon Cadbury owner Mondelez publishes its earnings update for the third quarter. And first thing tomorrow the latest GFK Consumer Confidence Index for October is released.

Cereal and snacking giant Kellogg reports its third quarter results on Tuesday, with a trading update from Just Eat in the morning.

Wednesday sees Kraft Heinz and Molson Coors post third quarter figures in the US, with a trading update in the UK for high street bellwether Next.

Tate & Lyle reveals its interims on Thursday alongside the latest quarterly update from Morrisons. Analysts expect the Yorkshire grocer to continue to outperform its big four peers, with like-for-like growth of about 2.5% in the third quarter.

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