The retail/wholesale merger has received provisional approval from the Competition and Markets Authority.

EUROPE–Tesco has acquired provisional approval from the U.K. competition regulator to purchase the U.K.-based food wholesaler Booker Group for approximately £3.7 billion.

For the past six months, the Competition and Markets Authority has been investigating the merger and how it would affect competition. The CMA found that Tesco, as a retailer, and Booker, as a wholesaler, do not compete head-to-head in most of their activities and that the merger might increase competition in the wholesale market as well as reduce prices for shoppers.

The CMA also concluded that the wholesale market would remain competitive for the longer term.

“Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers,” says Simon Polito, chair of the inquiry group.

The merger between Tesco and Booker was announced last January and would aim to bring a host of benefits to consumers, independent retailers, caterers, small businesses and suppliers, as well as deliver a significant value to its shareholders.

Furthermore, by merging Tesco and Booker’s retail and wholesale experience, supply chain and digital capabilities, the combined group would also be able to provide more choices, quality, price and service in the food market, while also improving efficiency and reducing food waste. The merger would also create a retail and wholesale giant with a turnover approaching £60 billion.

Tesco currently has 3,200 U.K. stores whereas Booker supplies 117,000 independent retailers under its symbol group brands Premier, Londis, Budgens and Family Shopper.