The Office for Competition within the Malta Competition and Consumer Affairs Authority has given the go ahead for Retail Marketing Ltd to take over the supermarket operations of seven companies.

The seven companies are Co-op Trading Co. Ltd, Polrem Ltd, S. Borg & Sons Ltd, Tower Supermarkets Complex Ltd, Valyou Pendergardens Operations Ltd, Belleview Supermarkets Co. Ltd and Valyou Supermarket Ltd, which run Park Towers Supermarket, Valyou Supermarket, Tower Supermarket, Trolees Supermarket and Lasco Supermarket, spread over eight localities.

They said the idea of the joint venture is to create a dynamic new player in the Maltese grocery retail market. They explained they need to improve their customer proposition as a result of the changes in the Maltese market over recent years, driven primarily by the mainstream success of significant entries and expected future changes because of expansions or new entrants.

Initially, the Office for Competition had serious doubts that the proposed concentration could prima facie limit competition in the grocery retail market. It identified possible competition concerns, specifically with regard to the possibility of a substantial lessening of competition when defining the relevant geographic market at a local level, attributed to the reduction in the number of independent grocery retail stores.

A preliminary information-gathering exercise, identified the Sliema – St. Julian’s area and the Qawra – Mellieħa area to be rather more concentrated in terms of the grocery stores involved in the proposed concentration when compared to the other local geographic markets.

The Office for Competition felt that a detailed study was warranted to verify the concerns raised. Therefore, last February, it launched an investigation to establish whether, if implemented, the proposed concentration could lead to a concentration situation and, if so, whether such a situation could be expected to give rise to a substantial lessening of competition within any market or markets in Malta.

An assessment made as part of this investigation led the Office for Competition to conclude there appeared to be no threat of competition being substantially negatively affected as a result of the proposed joint venture. It also noted that the parties involved argued that the concentration is expected to result in improved efficiencies, economies of scale and cost savings that would facilitate improvements in the following areas: price and improved competition; investment in quality management, including professional management structures; investment in labour resources through training and improvements in IT systems; improved working environment for personnel and investment in higher health and safety standards; and higher standards for employees, job creations and better financial packages.

The Office for Competition found that the market share of the companies in question did not exceed 25 per cent, except for Tower Supermarket. which accounted for 35 per cent of its relevant market. Quoting the UK Office of Fair Trading, the Office for Competition argued that where combined market shares are below 40 per cent, then these should not give rise to competition concerns.