In particular, it said Tesco does not supply goods to the catering sector.
The U.K. Competition and Markets Authority provisionally cleared a merger between Great Britain's number one grocer, Tesco PLC (TSCO.LN), and wholesaler Booker Group PLC (BOK.LN), saying that the level of competition in their respective markets is sufficient to counterbalance any rise in prices or reduction in service levels. It also owns convenience store chains Budgens, Londis and Premier, as well as trade-facing Makro and Booker Wholesale.
A raft of rival wholesalers have also raised concerns the deal could see Booker benefit from improved supplier terms making it hard for them to compete, according to the CMA.
The £3.7 billion buyout has been subject to an aggressive pushback from competitors, with seven of Booker's biggest rivals last month demanding that the deal be blocked.
The Competition and Markets Authority said the deal would not raise competition concerns.
But on announcing its provisional findings, the CMA said Booker would be able to negotiate better terms from its suppliers for some of its groceries, and that it was likely to pass on these savings to the shops it supplies. The CMA has provisionally concluded that the level of competition in the grocery wholesale and retail markets would be sufficient to defeat such a strategy.
Tesco noted that it will continue to work with the CMA as it prepares the Final Report due by the end of December.
The U.K. regulatory body referred the merger for further investigation in July as it believed the deal could lead to worse terms for shoppers.
'The group, recognising that Tesco's shops nevertheless compete with Booker-supplied shops, considered the impact of the merger in every local area where a Tesco and a Booker-supplied shop are both present (over 12,000 shops).