Tesco's £3.7bn ($5bn) takeover of food wholesaler Booker has been given the green light by the UK's top competition regulator.
The Competition and Markets Authority (CMA) ruled after a seven-month investigation that the merger did not pose competition concerns in the retail or wholesale sectors.
In arriving at its decision, the CMA noted that Booker does not own the shops it supplies such as Premier, Londis and Budgens.
"Although these shops compete with Tesco, Booker cannot directly determine how they compete," the regulator said.
The CMA also found that it was unlikely that the merger would raise prices or reduce service quality at either the wholesale or retail levels, due to existing strong competition in both areas.
Tesco has more than 3,000 stores across the UK, while Booker is the country's largest wholesaler.
Simon Polito, chair of the CMA inquiry group, said: "Retailers have told us that they shop around for the best prices and service from their wholesaler, and we are confident that this will continue after Tesco buys Booker.
"Millions of people use their local supermarket or convenience store to buy their groceries or essentials, so it is vital that they have enough choice to secure the best deal for them. Having examined the evidence in depth, we are satisfied this will remain the case following the merger."
Analysts said the merger could lead to further consolidation in the UK retail sector amid intense competition, heightened margin pressure and the emergence of online competitors.
"The CMA has said it thinks consumers could benefit from lower prices, which suggests even it thinks suppliers will be squeezed by this extreme buying power of this new behemoth," said Neil Wilson, senior market analyst at ETX Capital.
"We'll need to see which suppliers win from the deal and which are hit – ultimately if you are not selling to Booker/Tesco, there is not a whole lot left."