Chile’s competition watchdog has blocked the planned merger between local retailers D&S and Falabella.
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The ruling, announced yesterday (31 January), has surprised industry watchers. In May, Chilean food retailer D&S agreed to merge with South American department store chain Falabella in a deal that was set to create a US$15bn retail giant.
The controlling family shareholders in Falabella, which has operations in Chile, Peru, Argentina and Colombia, were set to hold a 77% stake in the new company. D&S shareholders planned to own the remaining 23% interest.
However, Chile’s Tribunal de Defensa de la Libre Competencia said the merger would lead to a “huge change” in the country’s retail sector.
“(The merger) would create a company that would be the dominant player in retail,” the tribunal said in its ruling.
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By GlobalData“In view of the size of the Chilean economy and the significance of the barriers to entry that exist in the various areas of business that make up the retail market, it is unlikely a new operator would be able to enter and impose sufficient competitive pressure.”
The retailers can appeal to the country’s Supreme Court. Officials at neither company could be reached for immediate comment.
