Brazil’s Administrative Council for Economic Defence (CADE) has recommended the approval of the acquisition of Grupo BIG by the Brazilian arm of Carrefour.
The transaction involves the acquisition of 386 self-service retail units, 15 gas stations and 11 distribution centres from Grupo BIG Brasil, which operating as Walmart Brasil earlier.
According to the SG/CADE, the companies involved in the deal are currently competitors in three markets: self-service retailing (involving supermarkets, hypermarkets, wholesalers and shopping clubs); wholesale distribution of primarily food products and other goods; and retail fuel resale.
The R$7.5 billion deal (€1.2 billion) was announced in March of last year by Carrefour Brazil and notified to CADE in July.
Analysis revealed that, in a post-merger scenario, the concentration would not generate competition concerns in the markets of wholesale distribution and gas stations.
With regard to the self-service retail sector, the SG/CADE ruled out competition risks in most of the relevant markets.
However, for a small portion of the markets, sufficient elements were not verified to rule out the probability of exercise of market power by the companies involved in the deal.
Remedies To Mitigate Competition Risks
As a result, the SG/CADE proposed the adoption of remedies negotiated with the companies to mitigate competition risks arising from the operation.
The so-called Agreement on Concentration Control (ACC) foresees the divestiture of some self-service retail units (less than 10% of stores), in addition to commitments related to non-competition and the maintenance of the economic viability of the divested units until the effective transfer of the businesses.
CADE has up to 240 days, extendable for 90 more days, to conclude its review of mergers. The legal deadline for concluding the analysis of the transaction involving Grupo BIG Brasil began on 12 July 2021.