OFT refers Booker’s planned acquisition of Makro to competition watchdog

Cash and Carry

UK’s Office of Fair Trading (OFT) said it had sent the finalised acquisition by British food wholesaler Booker Group Plc (LON:BOK) of Makro Cash & Carry UK Holding Ltd to the Competition Commission (CC) for additional probe.

The move follows an investigation by the OFT, which has found that the combination could threaten competition between cash and carry outlets in the UK as it brings together two close competitors and reduces the number of national operators from four to three. Apart from Booker and Makro, the other rivals in the sector are Bestway Group and Costco Wholesale UK Ltd.

The probe, which took into account the results of a survey of some 4,000 customers across 22 local areas, as well as other evidence, has also revealed that the parties overlap in 13 local areas, the regulator said.

Booker signed a deal to buy Makro UK, the local wholesale operation of German retailer Metro AG (ETR:MEO), at the end of May for GBP15.8m (USD25.3m/EUR19.8m) in cash and new shares equal to a 9.99% stake, valued at GBP123.9m. The transaction was completed in July.

Amelia Fletcher, OFT chief economist involved in the investigation, commented that the sale of some outlets by Booker and Makro UK in connection with the deal was not enough to eliminate competition concerns. According to Fletcher, the reduced rivalry could prompt a surge in prices or weakened service to both retailers and caterers, as well as to consumers.

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