The European Commission said yesterday (22 December) that it has cleared only part of Tesco's acquisition of the Czech and Slovak retailing business of Carrefour.

In a statement, the EC said that it has referred the Slovak part of the proposed acquisition to the Antimonopoly Office of the Slovak Republic, following the latter's request under the EU Merger Regulation.

This is the first time that a merger case has been referred to a competition authority in a Member State that joined the EU in 2004.

"The Commission found that the transaction affects competition in three local markets which are distinct markets within the Slovak Republic and which do not form a substantial part of the Common Market," the EC statement said. "Those aspects of the transaction will be examined by the Slovak competition authority under national law. At the same time, the Commission approved the transaction with regard to the Czech Republic as it would not significantly impede effective competition in the Czech retailing sector."

Tesco owns and operates 31 stores in Slovakia and 27 stores in the Czech Republic. Carrefour owns 11 large-format stores in the Czech Republic and four large-format stores in Slovakia.

"In its request for referral, the Antimonopoly Office of the Slovak Republic claims that the transaction affects competition in the market for the retail sale of daily consumer goods in supermarkets and hypermarkets in three local markets in the cities of Bratislava, Košice and Žilina. The Slovak competition authority considers that these markets do not constitute a substantial part of the Common Market," the Commission said.

The Commission ruling found that in the Slovak Republic, the transaction strengthens Tesco as the leading retailing company at the national level. Furthermore, in the cities of Bratislava, Košice and Žilina the merged entity would have high market shares and the number of available alternative stores would be reduced.
"Therefore, the Commission concluded that the transaction affects competition in these three local markets. Furthermore, each of these local markets constitutes less than 0.1% of the total grocery sales in the Common Market and cannot be regarded as a substantial part of the Common Market."

The Commission said it has therefore referred the assessment of the Slovak part of the transaction to the Antimonopoly Office of the Slovak Republic which is better placed to carry out further investigations.

In the Czech Republic, the merged entity would still only be the fourth largest retailing group at the national level. Even in the individual local markets the parties would still face competition from a number of other strong retailers such as Lidl&Schwarz, Ahold or Rewe, the Commuission said.