Merger control: first-ever FCA’s decision to block a transaction

More specifically, in the catchment area affected by the transaction, there were several supermarket stores spread out among three competing retailers. The takeover of the local hypermarket as part of the examined transaction would have led to the removal of one of these competitors by creating a duopoly. According to the FCA, this change in the competitive landscape would have presented several competitive risks on the local market:

• a significant reduction in the diversity of supply for the individual consumers;
• a risk of price increases in the buyers’ retail stores, due to the elimination of rivalry between the hypermarket they wished to buy and the one they already owned in the area;
• a risk of coordinated effects between the two remaining retailers in the area, since they would easily have been able to tacitly coordinate their behaviours.

The FCA’s analysis was further substantiated by the presence of regulatory barriers to entry which made the arrival of new competitors highly unlikely.

In an attempt to address these competition concerns, the notifying parties offered as a commitment to reduce the surface area of the acquired retail store by approximately 30%. But the FCA considered that this was not sufficient to eliminate the above competitive risks. Given that no other appropriate remedy could be envisaged, the FCA decided to block the transaction and thereby handed down its first blocking decision since it was given the power to do so in 2009.

The full text of the FCA’s decision is not yet available on its website and will be published at a later stage. For more information, the FCA’s press release is available here (in English).

For more information please contact Florence Leroux or Eliott Costet.