Tesco, the UK’s largest retailer, has said its strategic purchasing partnership with French supermarket giant Carrefour will begin in October.

Both companies, which are the two largest supermarkets in Europe in terms of sales, hope the buying partnership will lower costs in the face of intense competition in the retail sector.

However, competition authorities in France have begun an investigation into the proposed partnership to assess what impact it will have on suppliers to both supermarkets, as well as on consumers. French regulators are also investing in similar partnerships between other supermarkets chains.

As part of the proposed buying deal between Tesco and Carrefour, both supermarkets will jointly purchase own-brand products from suppliers, which they say will improve the quality and choice of product available in their stores at even lower prices. In effect, Tesco and Carrefour will use the weight of their combined buying power to squeeze better deals from their suppliers of own-label products, including food and drink suppliers.

In 2017, Tesco’s profit margin widened from 1.8% to a healthy 3%, while Carrefour’s profit margin stood at 2.5%.

Tesco, which buys products from almost 500 Irish food and drink companies and exports around €655m worth of Irish food and drink every year, says the alliance with Carrefour will strengthen its relationships with its suppliers and create significant opportunities for those suppliers.