South Korea’s competition regulator has approved the sale of Wal-Mart’s 16 Korean outlets to the country’s biggest discount operator Shinsegae on the condition that the company sells on one-quarter of the stores. The deal, which was announced in May, is worth US$882m.
The Korean Fair Trade Commission said that Shinsegae must sell four or five stores because the acquisition could increase its market dominance in some regions. This, the FTC said, may result in “rising prices and deteriorating service quality”.
However at a national level, the FTC said in a statement: “It’s hard to see the merger as hampering competition.”
After eight years in the market, Wal-Mart commanded a 4% market share. The group posted a net loss of KRW9.9bn (US$10.49m) on sales of KRW728.7bn for fiscal 2005.
The retreat of the world’s largest retailer mirrors the exit made by the world’s second-largest retailer Carrefour earlier this month and demonstrates the difficulties facing foreign retailers in the South Korean market.