Tesco Booker

Charles Wilson has run rings round the competition for years. Can he now run rings round the Competition & Markets Authority? That is the £3.7bn question at the heart of the Tesco-Booker merger.

Wilson’s argument is that Booker only owns six c-stores - ‘conveniently’ dismissing the 6,000-odd shops his cash & carries supply. But combined with the 3,000 c-stores owned or operated by Tesco, even Stuart Rose - Wilson’s friend and former boss at Booker and M&S - believes the CMA “should be all over the deal like a rash. The small shopkeepers are now effectively going to be supplied by Tesco.”

The challenge facing the CMA isn’t easy, however. The food and drink sector is changing fast - with the lines blurring between retail and food to go, between B2B and B2C, between convenience, discounters, supermarkets and online - and the CMA will surely have to come up with a new framework in which to view competition.

The Times was this week claiming the watchdog could force the sale of 635 Tesco stores - on the basis that they were situated less than 500 metres from a shop supplied by Booker. But that’s hardly a viable remedy: on that basis indies could open Budgens, Londis, Premier or Family Shopper stores next to Tesco stores all over the country and force them to shut up shop.

Its rationale also ignores the point that these shopkeepers are independent. With a lot of misinformation swirling about, it’s an easy mistake to make - even if you’re an independent yourself. One @MyLocalPremier retailer tweeted: “Will we all become #tesco locals with extortionate prices? Let’s hope not!” But Tesco can no more set his prices than Booker does today. If Booker doesn’t then share the savings, he can take his trade elsewhere. And if Booker can offer better prices, as it promises, that will enable him to compete more effectively - including against Tesco Locals, with their “extortionate prices”.

No wonder the trade is so divided, as our survey of independents confirms. Wilson’s construct is disarmingly simple, logical and compelling. But there’s also a touch of the Faust. And it will tie the CMA up in knots.