The Office for Competition within the Malta Competition and Consumer Affairs Authority (MCCAA) has ruled against Lidl, prohibiting it from acquiring a property in Żabbar currently housing Scotts supermarket and owned by Said Investments Limited.

The decision, issued on 18th September, follows an in-dept investigation by the office of the proposed transaction and is subject to appeal. 

Lidl, a German retailer operating in 31 countries, has been trying to buy the site since 2021, along with two other Scotts outlets in Burmarrad and Sliema. However, the office had only approved the acquisition of the two outlets, noting that the addition of the Żabbar location to the Lidl brand would “substantially lessen competition” in the area.

Now, the findings of the office have noted that the acquisition would have allowed Lidl to strengthen its position on the grocery retail market in the southern part of Malta. More specifically, the office found that the acquisition would have widened the gap between its competitors and limited market competition. 

Additionally, it remarked that “Lidl did not offer commitments that were sufficient to address the substantial lessening of competition concerns as identified by the office for Competition.”

During the investigation, the office received feedback from various stakeholders, including those active in the grocery retail market. Aside from strengthening its position, market participants were concerned that the transaction would reduce competition, affect the viability of other players in the grocery retail industry and erode consumer welfare.

The office also completed a comprehensive analysis to classify grocery stores with a sales area of 200 square meters or more based on their ability to impose competitive constraints in the market.

The analysis evaluated stores on price, range, service and quality, determining that 53 out of 87 stores meet the competitive criteria across at least two of these categories, and were therefore classified within the relevant product market.

Furthermore, the office assessed the topography of Żabbar, customers’ willingness to travel, the diversion ratios derived from an exit-store survey at Scotts and the supermarkets’ catchment area.

Based on this analysis, the office considered a 15-minute driving time to be a realistic estimate of shoppers' willingness to travel for groceries. 

The office also considered the potential for new competitors to enter the market, as well as the likelihood of existing players expanding or exiting. This assessment focused on whether such changes were realistic, how quickly they could happen, and whether they would be substantial and sustainable enough to have a meaningful impact on market competition.

In a separate decision by another entity, the Planning Authority has greenlit a new, second Lidl supermarket in Qormi, sparking criticism that the island is being inundated with the discount supermarket chain. Currently, there are 10 Lidl supermarkets across Malta and Gozo, with the upcoming Qormi outlet representing the 11th, meanwhile another Lidl supermarket in Żebbuġ is currently being developed, which would be the 12th on the island.