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ip/97/392

Brussels, 6th May, 1997

Commission clears the acquisition by Tesco of ABF's businesses in the Irish retail sector

The European Commission has approved the acquisition by Tesco of certain business interests in Ireland and in Northern Ireland currently owned by Associated British Foods Plc (ABF). The Commission considered that current and potential competition in the Irish retail sector will not allow the combination of Tesco's buying power, and ABF's position as established market leader, to result in a dominant position in Ireland or Northern Ireland.

Tesco is the parent company of a food retailer having 571 stores in England, Scotland and Wales. It has one store in Northern Ireland but no presence in the Republic of Ireland.

The business which Tesco will acquire are located in both Ireland and Northern Ireland. In Ireland these include the Quinnsworth and Crazy Prices retail chains, and in Northern Ireland they include the Stewarts Supermarkets and Crazy Prices retail chains. The acquisition will also give Tesco control of ABF's "Winebarrel" off-licence interests and its "Lifestyle Sports & Leisure" chain, both active in Ireland and Northern Ireland. Tesco will also acquire two non-retail ABF businesses in Northern Ireland. These are the Kingsway Fresh Foods meat processing plant and the Daily Wrap Produce fruit and vegetable packaging plant.

The acquisition will not lead to any immediate enhancement of market shares, as Tesco will be acquiring an interest which was already present in that form in the retail grocery sector in Ireland. In its assessment the Commission has explored whether a dominant position might have been created by the combination of Tesco's buying power and other strengths related to the scale of its operations, with the largest retail grocery chain active in Ireland and in Northern Ireland. The Commission also examined the significant changes that Tesco's entry will bring about in the grocery sector in Ireland, which are likely to structurally modify the way in which suppliers, traders and retailers have been traditionally operating. In this respect the Commission has taken note of certain undertakings given by Tesco to the Irish government about how it plans to organise its activities, and in particular about the relationship it will have with Irish suppliers.

In the light of the current competitive situation in the retail sector in Ireland and the presence of well-established companies such as Dunnes, Wellworth, Superquinn, and the competitive constraints exerted in particular by the potential for large outside retail chains to enter into the Irish market, the acquisition should not create or strengthen a dominant position within the meaning of the Merger Regulation.

The Commission therefore decided not to oppose the operation and to declare it compatible with the common market and with the functioning of the EEA Agreement.


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