The UK’s competition regulator has provisionally cleared Tesco’s £3.7bn takeover of Booker.

The Competition and Markets Authority (CMA) has stated that the deal could in fact increase competition in the wholesale market and mean reduced prices for consumers.

CMA added that Tesco and Booker do not directly compete in most activities – particularly in supplying the foodservice sector, where Booker makes 30% of its sales and Tesco does not have a presence.

Concerns had been raised that the merger could reduce competition and choice for shoppers. However, CMA states it has considered the impact of the merger in every aspect and concluded that due to the highly competitive wholesale and grocery markets, a merger would be acceptable.

Chair of the inquiry group, Simon Polito, said: “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.”

Tesco has stated it looks forward to “creating the UK’s leading food business” and that the merger had “always been about growth, and will bring benefits for independent retailers, caterers, small businesses, suppliers, consumers, and colleagues”.