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Tesco’s [LON:TSCO] GBP 3.9bn (EUR 4.57bn) takeover bid for the UK-based wholesaler Booker Group [LON:BOK] faces lengthy scrutiny from the UK Competition and Markets Authority (CMA), The Sunday Times reported.

Competitors said the proposed takeover would give Tesco a market share of 20% at a minimum in convenience stores and would increase its total market share in groceries to higher than 30%.

The item went on to quote Ocado [LON:OCDO] chairman Stuart Rose, who said the CMA will carefully scrutinise the deal, adding that it would mean Tesco will effectively be a supplier to small shopkeepers.

Another senior figure in the sector said standalone retailers will try to delay and derail the deal, with the assistance of the Association of Convenience Stores, the article continued.

Some parties have urged the CMA to consider the wider implications of the deal, which will lead to Tesco supplying the catering sector, the report said.

Tesco chief executive Dave Lewis and Booker CEO Charles Wilson said they had received advice saying CMA will not be overly concerned due to the franchise status of 5,500 Booker convenience stores, the item continued. It is thought that the advice was provided by lawyers at Freshfields, according to the report.

The article noted Tesco in a previous deal, its acquisition of the convenience store chain T&S Stores in 2002, successfully argued that convenience stores and supermarkets were in different categories.

Separately, the newspaper said Lewis has promised that the takeover will yield cost savings of GBP 175m per year inside three years.

The Sunday Telegraph quoted Lewis, who said his main concern with regards to antitrust issues was that large consumer goods companies would be worried that the enlarged group would be able put pressure on them on price.

Booker supplies some convenience stores including Londis and Budgens that are competitors with Tesco’s small outlets, the item noted.

Lewis said the enlarged group will try to resist price increases by the major consumer brands, according to the report.

A Mail on Sunday report quoted a senior retail figure who said that Lewis said CMA might require Tesco to guarantee that consumers will benefit from the price savings.

The deal would give Tesco an additional 2% share of the UK grocery market, according to analysts cited by the report. That CMA may consider that increased share to be too much, the item added.

Lewis said the takeover would not increase number of stores under the Tesco brand and argued that the deal does not pose a threat to suppliers. The CEO claimed that food producers and suppliers had already endorsed the deal, without identifying those parties.

One executive at a rival grocery company said suppliers would have concerns about the implications of the deal for their profits. Most of the additional profit to come from the takeover would be derived from suppliers, the executive said, adding that the enlarged group could have a market share of more than 50% on some consumer brands.

Separately, the report said the Grocery Code Adjudicator, a regulator established after the last regulatory inquiry into the UK supermarket sector, does not have jurisdiction over wholesalers such as Booker.

The item went on to cite supermarket sources who said the adjudicator’s role would need to be larger. A source said reducing buying costs is the driving force behind the merger, and therefore it would not be too much for the CMA to ask that consumers should see some of the benefits.

However, the report went on to cite sources familiar with the CMA’s remit, who said enforcement of pricing controls may be difficult. The CMA would not comment, the report said.

The newspaper went on to cite an analyst who said bringing together Lewis and Charles Wilson, Booker’s well respected chief executive, is a positive aspect of the proposed deal. The analyst predicted longer-term cost efficiencies of GBP 600m annually.

Separately, an analytical report in The Sunday Times said Tesco non-executive Richard Cousins resigned in December due to his opposition to the Booker deal. Cousins said Tesco needs to simplify its business rather than make it more complex, according to the report.

Tesco said on Friday, 27 January that the Booker deal was the reason for Cousins’ resignation from the board, but did not give further details, according to The Mail on Sunday item.

Booker shares gained 29.2p to close at 212.3p on Friday, 27 January, giving the company a market capitalisation of GBP 3.77bn.