Belgian Competition Authority Clears Delhaize Takeover of Delfood With Conditions

Delhaize, a Belgian food retailer operating mainly through franchised stores, runs a network of 745 outlets across the country under brands including AD Delhaize, Proxy Delhaize and Shop&Go Delhaize. Delfood is also active in the distribution of food and daily consumer goods, both at wholesale and retail level, primarily through its Louis Delhaize chain, which consists of 322 stores operated under various commercial arrangements, per a statement.

The transaction involves Delhaize acquiring all of Delfood’s activities, covering not only the Louis Delhaize retail network but also Delfood’s wholesale operations. Given the size of both companies’ turnover, the deal required prior approval under Belgium’s merger control rules, according to a statement from the BCA.

During its review, the authority examined the potential impact of the acquisition on several markets. These included the national wholesale distribution of food and non-food products, as well as local retail markets for everyday consumer goods in proximity stores and petrol station shops located outside motorways. The BCA defined these local markets based on each store’s catchment area, meaning the geographic zone from which most customers and revenues are drawn, per a statement.

The investigation focused in particular on how the merger could affect prices, product availability and service quality at the retail level. It also assessed the situation of independent stores that are supplied by Delhaize or Delfood but are not directly controlled by them, according to a statement.

The BCA found that Delhaize and Delfood compete directly in several local markets, especially in proximity stores and petrol station shops. In certain areas, the loss of competition between the two chains was considered significant and not adequately offset by other retailers. The authority also identified concerns about the bargaining position and competitive freedom of stores supplied by the two groups, per a statement.

As a result of these findings, the BCA initially expressed serious doubts about whether the transaction could be approved without remedies. These concerns were formally communicated to Delhaize, which subsequently proposed a set of commitments designed to address the identified risks, according to a statement.

Under the approved conditions, Delhaize must divest a number of proximity stores and petrol station shops in specific local markets to another franchisor. Additional measures will grant greater contractual freedom to certain stores that are supplied or commercially supervised by Delhaize or Delfood, allowing them to compete more independently with Delhaize-branded outlets, per a statement.

The commitments also ensure that stores supplied by Delhaize or Delfood outside their franchise networks will continue to receive fair, reasonable and non-discriminatory supply terms consistent with existing conditions. Furthermore, if Delhaize intends to integrate any currently supplied stores into its own franchise networks, it must first obtain authorization from the BCA. This requirement is intended to allow the authority to prevent excessive concentration in local markets, according to a statement.