The Fair Trade Commission (FTC) on Wednesday conditionally approved an application by Carrefour SA to acquire Wellcome Taiwan Co (惠康百貨), saying the deal would create greater economic benefits than disadvantages to consumers as a whole.
Carrefour in June announced that it would acquire Wellcome Taiwan for 97 million euros (US$117.54 million), and have all the Wellcome supermarkets and Jasons Market Place premises across the nation under its banner within 12 months of closing the deal.
The France-based hypermarket chain made a deal with Hong Kong-based Dairy Farm International Holdings Ltd, a retailer that launched Wellcome Taiwan in 1987.
As the merger would boost the retailer’s scale and reduce procurement costs, while boosting online sales integration and distribution efficiency, consumers would benefit from more competitive products and convenient services, the commission said.
However, the commission added four conditions to ensure that the merger would allow consumers to enjoy more benefits than downsides, amid concern that Uni-President Enterprises Corp (統一企業) and its affiliates could enjoy special treatment because they are suppliers to the hypermarket chain in Taiwan and hold a 40 percent stake in the company.
First, Uni-President and its affiliates must follow regular trading norms and must not be offered any privileges in deals with Carrefour Taiwan (家樂福), based on the principle of fair trade.
Second, the rights of small and medium-sized suppliers — those whose average monthly sales to Carrefour Taiwan are below NT$1 million (US$35,162) — must be fully protected over a period of three years if changes are to be made in special projects between the two sides, effective from the day after the merger is finalized.
Third, within the three-year period, Carrefour Taiwan cannot terminate its relationship with these small suppliers or remove any of them from its supply chain without justification. If that happens, the companies can ask senior Carrefour managers to review the decision.
Fourth, within the three years of the merger going into effect, Carrefour Taiwan must submit to the commission on April 1 each year documents proving that business conditions between the company and Uni-President are in line with their previous agreements. Carrefour Taiwan must also submit an annual report on the number of its small suppliers and its total purchases from them.
Following the acquisition, Carrefour Taiwan would own 361 outlets across the nation, making it the second-largest supermarket chain in terms of sales behind Pxmart Co (全聯實業).
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