The Competitive Assessment of Mergers in Retail Grocery Markets: A Basket Case?

This paper shows that competition authorities in Europe have adopted very different approaches to assess the competitive effect of horizontal mergers on retail grocery markets. Specifically, we highlight substantial differences between the UK CMA, the German Cartel Office, and the French Competition Authority. All these authorities have considered the effect of mergers between grocery retailers on local markets where the merging parties overlap, however, the method and scope of the competitive assessment they have developed vary significantly. The CMA has demonstrated willingness to apply a mechanistic approach, recently using an upward pricing pressure test in their investigations. This may lead to less discretion when compared with the approach taken by the German Cartel Office or the French Competition Authority, which appears more qualitative in nature despite heavy reliance on the degree of post-merger market concentration. Further, the CMA approach applies a very low threshold for intervention, while in contrast the Adlc has been significantly more lenient, in instances finding no competition concerns in local markets where the merged entity would have at least 50 percent market share.

By Benoît Durand¹

I. INTRODUCTION

One major motivation behind retail grocery chains looking to merge is to achieve synergies, notably those associated with scale. Indeed, bigger size can generate significant cost advantages. In theory, such size advantage can be achieved or