Tesco won provisional approval for its 3.7 billion pound ($4.9 billion) takeover of wholesaler Booker from the United Kingdom competition regulator on Tuesday, moving Britain's biggest retailer closer to securing a new avenue of growth.
It examined evidence from Tesco and Booker, as well as evidence from more than 65 wholesalers, suppliers and retail chains and a survey of hundreds of retailers. "Tesco also anticipates savings in relation to final mile delivery to customers".
"In particular, Tesco does not supply the catering sector to which Booker makes over 30 percent of its sales".
The CMA said it 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).
Tesco's £3.7 billion takeover of wholesale group Booker has been given the provisional green light after the competition watchdog said it would not lead to higher prices or hit service for shoppers.
But the CMA said it was clear the two firms did not now compete head-to-head in most of their activities - such as supplying the catering sector, which accounts for 30% of Booker's business.
Shares in Tesco and Booker were up 4.8 percent and 5.1 percent respectively at 0905 GMT.
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.
They argued that Booker could raise prices to the shops it supplies.
"Strong competition in the market ensures that shoppers can choose the best deal for them".
Tesco expects to complete the merger in early 2018. The CMA will launch an investigation into the deal.
"We look forward to creating the UK's leading food business, bringing together our combined expertise in retail and wholesale", it said.
But he said the focus will now shift on to whether investors will approve the takeover, with 75% of Booker shareholders required to vote in favour.
As of 09:28 GMT, Tesco's share price had added 4.55 percent to 185.05p, outperforming the broader United Kingdom market, with the benchmark FTSE 100 index now standing 0.12 percent higher at 7,423.98 points.