UK: Booker shares jump on provisional OK for Makro deal

CC set to clear Booker / Makro merger

The Competition Commission (CC) has provisionally cleared the completed acquisition by Booker Group PLC (Booker) of Makro Holding Limited (Makro).
Booker and Makro are both national cash-and-carry wholesalers supplying a range of food, drinks, grocery and non-food products to independent retailers and caterers. Booker operates 172 stores whilst Makro has 30 stores. The cash-and-carry market is worth an estimated £11 billion a year in the UK.

In a summary of its provisional findings published today, the CC has concluded that the merged company would continue to face sufficient competition from other wholesalers-both cash-and-carry and delivered-in all areas affected by the merger. The CC therefore believes that the existing and potential alternatives offered by other suppliers will ensure that the merger does not lead to a substantial lessening of competition.

Simon Polito, CC Deputy Chairman and Chairman of the Booker/Makro inquiry, said:
‘The wholesaling market is complex, diverse and dynamic. Our evidence points to the fact that customers can and do switch between different types of wholesalers, so we looked closely at all the areas where Booker and Makro stores currently overlap to see what other sources of supply would remain. In all the areas we looked at, Booker would continue to face competition from national, regional or local wholesalers so we don't believe customers will face higher prices, lower-quality service or other issues as a result of the merger.'

The CC found that although the parties can vary prices locally in response to competition, profitability does not markedly increase in areas with limited cash-and carry competition, underlining that other types of wholesaler do provide an alternative for customers. The CC believes that in the absence of the takeover by Booker, Makro would most likely have ceased trading and its properties sold to various parties.

The Office of Fair Trading (OFT) referred the case on 8 November 2012. The CC will consider responses to the provisional findings before publishing its final report. The CC is expected to publish its final report by 24 April 2013.

The provisional findings summary and other information on the investigation are available at: www.competition-commission.org.uk/our-work/booker-makro. The full provisional findings report will be published shortly.

Original source: UK Competition Commission