CELEX: 31993M0301
Language: en
Date: 1993-02-04 00:00:00
Title: COMMISSION DECISION of 04.02.1993 declaring a concentration to be compatible with the common market (Case No IV/M.301 - TESCO LTD / CATTEAU SA) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31993M0301

COMMISSION DECISION of 04.02.1993 declaring a concentration to be compatible with the common market (Case No IV/M.301 - TESCO LTD / CATTEAU SA) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 045 , 17/02/1993 P. 0000

 COMMISSION DECISION of 04.02.1993 declaring a concentration to  be compatible with the common market (Case No IV/M.301 - TESCO  LTD / CATTEAU SA) according to Council Regulation (EEC) No  4064/89  (Only the English text is authentic)  The paper version of the decision is available through the  sales offices of the Office of Official Publications of the  European Communities. PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(b) DECISION Registered with advice of delivery To the notifying party Dear Sirs, Subject: <ind> Case No. IV/M.301 - Tesco Ltd./Catteau SA  <ind>  <ind> Your notification pursuant to Article 4 of  Council Regulation No. 4064/89  1. <ind> The notified operation concerns the proposed  acquisition by Tesco plc (Tesco) for the majority of the share  capital of Catteau SA (Catteau).  2. <ind> After examination of the notification, the Commission  has concluded that the notified operation falls within the  scope of Council Regulation No. 4064/89 and does not raise  serious doubts as to its compatibility with the common market.  I. <ind> The Parties  3. <ind> Tesco is the parent company of major food and grocery  retail chain, having 408 stores throughout the UK.  4. <ind> Catteau is a regional, food and grocery, retail chain  in North East France.  The business is family owned and  managed.  Catteau owns and operates 90 supermarkets, including  two hypermarkets, located mainly in the Nord and Pas-de-Calais  regions.  It has ten stores under franchise.  Almost all of its  activities arise from retail business.  Only 10% is related to  wholesale activities.  II. <ind> Concentration of Community Dimension  5. <ind> Tesco intends to acquire 85% of the share capital of  Catteau.  This will give Tesco sole control of the Catteau  business.  The  operation therefore constitutes a concentration  within the meaning of Article 3 of the Regulation.  6. <ind> The aggregate worldwide turnover of Tesco and Catteau  exceeded 5 billion ECU in 1991/1992 (10.10 billion for Tesco,  411 million for Catteau).  Both have a Community wide turnover  of more than 250 million ECU.  Neither achieves more than two- thirds of its Community wide turnover in one and the same  Member State.  Therefore, the proposed operation has a  Community dimension in accordance with Article 1(2) of the  Merger Regulation.  III. <ind> Compatibility  7. <ind> The assessment of a concentration in the retail  business sector has to take account of the market power that  can be exercised towards consumers as well as towards  suppliers.  8. <ind> Consumers   <ind> Tesco and Catteau derive sales from supermarkets and  associated activities in the UK and in France respectively.   Thus, their customer base is separate, since supermarkets draw  customers from a local catchment area.  Consequently, there is  no geographic overlap between them, and no addition of market  shares.  Moreover, each is subject to powerful competitors in  its respective geographic markets (e.g. Sainsbury, Argyll, Asda  and Gateway in the case of Tesco and Auchan, Promodes, Cora,  Intermarché and Carrefour in the case of Catteau).  9. <ind> Suppliers   <ind> Out of their top thirty suppliers, Tesco and Catteau  have only four suppliers in common.  These are [Business  secret.].  All are major multi-national businesses.  Having  regard to Tesco and Catteau's competitors and the absence and  strength of common suppliers, it is clear that the proposed  concentration cannot significantly modify the buying power of  the parties.  IV. <ind> Ancillary Restrictions  10. <ind> The parties have submitted that the non-competition  agreements contained under Clause 9 of the purchase agreement  (Protocole d'Accord) are ancillary to the concentration.  This  clause provides that:   <tab> - <ind> firstly, Jacques and Jean Catteau, their spouses  and children, will not acquire, individually or collectively,  more than 10% of the share capital of any company primarily  engaged in retail grocery distribution, and   <tab> - <ind> secondly, that Jacques, Jean, Patrick, François  and Philippe Catteau do not exercise, directly or indirectly,  any management function in any company primarily engaged in  retail grocery distribution.  11. <ind> It is a well accepted general principle that non- competition clauses, binding the vendor to protect the  purchaser, represent  valid ancillary restrictions to a  concentration.  However, the duration and geographic scope of  such clauses should not exceed what the implementation of the  concentration reasonably requires.  12. <ind> Having regard to the territorial location of  Catteau's operations, the geographic scope of the clause should  be limited to the French Départements of Nord, Pas-de-Calais,  Aisne and Somme as well as those Belgian provinces lying along  the North-East French border.  13. <ind> Having regard to the fact that, on the one hand  Tesco, although one of the largest UK operators, has no  significant experience in the retail grocery distribution  business outside the UK; and that on the other hand, based on  the evidence provided by the parties, there seems to be no  technical know-how and limited commercial know-how; a duration  of three years for the non-competition agreements seems  reasonable.  14. <ind> Lastly, as regards the restriction on the acquisition  of more than 10% of the share capital of any company primarily  engaged in retail grocery distribution, this restriction should  not be used to prevent the purchase of shares for investment  purposes.  Consequently, this restriction should not be binding  where shares are purchased for investment purposes only and the  person concerned does not exercise, directly or indirectly, any  management function in the company concerned or any material  influence in that company.  15. <ind> Therefore the above restrictions are covered by the  present decision to the extent described above.  V. <ind> Conclusion  16. <ind> For the above reasons the Commission has decided not  to oppose the notified concentration and to declare it  compatible with the common market.  This decision is adopted in  application of Article 6(1)(b) of Council Regulation No.  4064/89.  For the Commission