Investigation into alliances between distributors

PARIS (Reuters) – the competition Authority announced on Monday opened an investigation into the covenants to the purchase that have been forged between Auchan, Casino, Metro and Schiever, as well as between Carrefour (PA:CARR), and système U.

The investigation also concerns the approximation recently announced between Carrefour and the british Tesco (LON:TSCO).

“The Authority has decided to strengthen its investigations on these reconciliations to the purchase (…) in order to assess the competitive impact of these connections on the relevant markets, both upstream to suppliers and downstream to consumers,” says the institution in a press release.

These agreements are potentially relevant to a significant portion of the consumer products marketed by the actors of the large distribution of the dominant food (food products, hygiene products and maintenance, bazaar, textiles), she adds.

The instructional services of the competition will be thus led to examine the providers concerned, as their competitors are not concerned by these agreements.

At the conclusion of its investigation, which can last several months, the constable of the competition may, if necessary, request a change in the terms of the agreements.

In an environment of price war still fierce in France, the distributors have multiplied the alliances in recent years to better negotiate the price of purchases, strengthen their competitiveness and preserve their margins.

Casino, previously an ally of Intermarché, turned to Auchan for a rapprochement of the world, while System U, a former ally of Auchan, joined forces with Carrefour for five years, allowing it to rise to the rank of leader in purchases in France.

Carrefour is also ally there is little to Tesco in the procurement of products of own brands – excluding fresh products – and in the non-tradable goods such as equipment stores, lighting, or the gondolas of presentation of the products.

THE THREAT AMAZON

These partnerships are seen in a context where the food distribution is disrupted by the ambitions of Amazon (NASDAQ:AMZN), with which Casino has finally decided to join forces through its subsidiary Monoprix, which became the first food distributor French to sell its products on the website of the american giant.

In a press release, Casino has confirmed that the alliances “Horizon”, of which he is a partner alongside Auchan Retail, Metro and Schiever, were the subject of an investigation initiated by the Authority last may 24 after the filing of an information package on the 18th of may.

“(…) always more respectful of a good balance of relations with suppliers, partners, Horizon, central of new generation, have made a set of commitments directly inspired by the conclusions of the States General of the Power”, stressed in the press release Casino.

Carrefour, for its part, has indicated that they have sent to the regulator the information necessary to the proper appreciation of its projects reconciliations to the purchase” and collaborate with the constable of the competition.

The distributor argued that the partnerships were “constructed in accordance with the rules of competition law”.

(Pascale Denis, with Gwénaëlle Barzic, edited by Jean-Michel Belot)