Mon, Nov 21, 2005 - Page 10 News List

Carrefour-Tesco deal moves forward

RETAIL SECTOR With Taiwan having given the nod to the asset swap on Thursday, the two companies are now awaiting a decision by the Czech Republic and Slovakia

By Jackie Lin  /  STAFF REPORTER

The first asset-swap deal between two global retail groups obtained the government's approval last Thursday, allowing Carrefour SA to take over Tesco Plc's business operations in the nation.

To complete the deal, a green light must also be given by the fair trade commissions of the Czech Republic and Slovakia, where Carrefour plans to hand over its 15 outlets to the British retailer.

"Now we're waiting for the European governments' replies. If everything goes smoothly, we hope to transfer Tesco's six stores here to Carrefour by February or March next year, after the Lunar New Year holidays," said Allan Tien (田中玉), spokesman for Carrefour Taiwan, during a phone interview yesterday.

Aiming to strengthen their market dominance, France's Carrefour and the UK's Tesco in late September announced a plan to swap their stores in Taiwan and Central Europe, with Tesco to withdraw completely from the local market, and Carrefour pulling out of the Czech Republic and Slovakia.

After two months of analysis, Taiwan's Fair Trade Commission last week issued a report, saying the two businesses' integration would not contravene the Fair Trade Act (公平交易法).

"Hypermarkets and supermarkets provide a distribution network for consumers to purchase low-priced daily necessities and food, and for suppliers to sell goods. They are highly replaceable for suppliers and consumers," the report said.

According to revenue figures from last year, Carrefour Taiwan accounted for 20.61 percent of the hypermarket and supermarket sector, ranking No.1 in the market. Tesco Stores (Taiwan) Co was in eighth place, with a market share of 2.93 percent, the report said.

"Following the integration of these two companies, the number of Carrefour's outlets will rise to 42, but its market share will not rise significantly. In addition, there remain numerous competitors in the sector and adequate competition is expected to be maintained," the report said.

Tesco currently has 1,000 own-brand products among a total of 45,000 items. Many of these products overlap with the 73,000 products offered by Carrefour.

As a result, the nation's largest hypermarket operator expects its product line to remain unchanged after the take-over, but there should be room to further trim prices thanks to an enhanced bargaining power, Tien said.

"The real winner is consumers," he added.

Although Tesco will soon pull out of the local market, the firm's management remains committed to maintaining service quality, market strategies and store operations, said Daisy Lee (李如秀), Tesco's corporate affairs manager.

The operator has continued to take part in cut-throat competition, for example offering the lowest price for Beaujolais Nouveau at NT$159 (US$4.7) a bottle last week.

It also signed a cooperation memorandum with the Taiwan Food GMP Development Association (台灣食品GMP發展協會) earlier this month to raise awareness of food safety.

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