WRITTEN QUESTION P-2070/99

by Concepció Ferrer (PPE-DE) to the Commission

(5 November 1999)

Subject: Situation in the European distribution sector following the merger of Promodes and Carrefour

With reference to the replies furnished by the Commission when it appeared before the European Parliament on 1 September 1999 in order to answer a question from Mr García-Margallo, MEP, on company mergers within the distribution sector, and whereas the Promodes-Carrefour merger will create serious problems in regions such as Haute-Savoie, where the giant company will control 86 % of the market, and Catalonia, where the group created by the merger will operate approximately 70 % of the region's supermarkets, and in view of the Europe-wide scope of such operations (the group runs major supermarket chains throughout the EU), could the Commission say what stage has been reached in the action it is taking with regard to this matter?

Answer given by Mr Monti on behalf of the Commission

(19 November 1999)

In the framework of the Community rules on competition and, in particular, Council Regulation (EC) 1310/97 of 30 June 1997 amending Regulation (EEC) 4064/89 on the control of concentrations between undertakings(1) (Merger Regulation), the Commission examines mergers and acquisitions where certain minimum turnover thresholds are achieved by the companies concerned (concentrations having Community dimension). The parties to such concentrations have to notify the project to the Commission and are as a rule not allowed to implement it before the receipt of a clearance decision. If a concentration threatens competition in a distinct market within a Member State the Commission, according to Article 9 of the Merger Regulation, has the possibility to refer the examination of such a concentration to the Member State, provided it receives a reasoned request for referral from the authorities.

On 5 October 1999, the Commission received a notification of the proposed merger between Carrefour and Promodes. The operation will create the largest European player in the food retail sector. The main effects of the merger will be in countries where the parties' businesses overlap: Spain, France, Italy and Portugal. In order to assess the case, the Commission looks carefully at the regional and local aspects of distribution. At the present stage the operation is under examination and a market investigation has been launched.

If the Commission after its market investigation comes to the conclusion that a concentration would create or strengthen a dominant position impeding effective competition (monopoly or joint dominant position of several undertakings), it will declare the proposed deal incompatible with the common market unless the parties propose to adapt their initial project in order to make it compatible.

So far, the Commission has examined around two dozen cases in the food retail sector in various European economic area (EEA) Member States. In one case, the proposed concentration between Kesko and Tuko (M. 784;1996), both Finnish companies active in the sale of daily consumer goods in Finland, the Commission concluded that the operation would create a monopolistic supply structure in large parts of the Finnish market, with combined market shares of 50 % on a national level. The concentration was therefore declared incompatible with the common market. In another case, Tesco/ABF (M. 914; 1997), concerning the food retail sector in Ireland and Northern Ireland, the Commission cleared the case taking note of undertakings offered by the parties to the Irish government with regard to the supply-side. In the case Rewe/Meinl (M.1221;1998), concerning the Austrian food retail sector, the Commission cleared the concentration subject to stringent conditions, limiting the proposed deal to one third of the target's turnover and to certain regions of Austria. Two other cases, Promodes/Casino (the parties later abandoned the project) (M.991;1997) and Promodes/S21/Gruppo GS (M. 1086;1998) were partially referred to the Member States concerned, and consequently dealt with by the French and Italian competition authorities.

At this preliminary stage of its review of the Carrefour/Promodes merger, the Commission is not in a position to express any view of the possible outcome of its investigations.

(1) OJ L 180, 9.7.1997.