THE competition watchdog has said Tesco’s acquisition of Booker could lead the supermarket giant to reduce the competitiveness of independent convenience stores in order to push customers into its supermarkets.

The £3.7 billion deal, first announced in January, has been referred for a full investigation by the Competition and Markets Authority (CMA) after it ruled shoppers in more than 350 local areas could face higher prices in their local shops.

These stores include Premier, Londis, Budgens and Family Shopper chains, which are currently supplied by Booker. In addition to this, Tesco owns the One-Stop franchise chain while a high proportion of its 250 stores in Scotland are convenience-sized Tesco Metro outlets.

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No details have been published on how many of the areas are in Scotland, but the 350 total is lower than analysts had expected.

In its initial findings, the CMA said: “There are concerns that, after the merger, there is potential for Booker to reduce the wholesale services or terms it offers the ‘symbol’ stores it currently supplies, in order to drive customers to their local Tesco.”

At the time the deal was announced, bosses said it would create the “UK’s leading food business”, but Tesco faced a backlash from some investors, who said the move was a “distraction”.

Laith Khalaf, senior analyst at Hargreaves Lansdown said sentiment among some investors was that the group is not yet far enough advanced in its recovery to take on a major acquisition.

“Tesco will be wanting to get the competition issue out the way before taking it to shareholder vote, which in itself could cause some issues,” he said.

Analysts at HSBC noted that a CMA review in 2015 of Booker’s £40m acquisition of retail group Musgrave – which operated the Londis and Budgens brands – suggested that independent retailers’ ability to transfer their business to another wholesaler and symbol group helped maintain competition.

“This offers some hope that once an in-depth review is carried out, [required] remedies may be even lower than the initial 350,” an analyst said.

The groups had requested the full investigation be fast-tracked ahead of a July 25 deadline. I granting this request, the CMA said other concerns were raised and considered in its phase 1 investigation but it had not found it necessary to conclude on all of these concerns given the fast track referral.

The investigation will take 24 weeks, which means the final report will be published before Christmas. An inquiry group chosen from the CMA’s independent panel members will now conduct further research and analysis.

A Tesco spokesperson said: “We are pleased that the CMA has accepted our fast track request, and we look forward to continuing our engagement over the coming months. “This merger has always been about growth, and we remain convinced that it will bring benefits for consumers, independent retailers, caterers, small businesses, suppliers and colleagues.”

In a statement, Booker said it looked forward to continuing our constructive engagement with the CMA.