In recent years, large buyers that had previously been in fragmented industries have increased their purchasing power through mergers and acquisitions. This change has placed more importance on the topic of limiting bargaining power and preserving free competition in the market. As a result, the European Union has become increasingly involved assessing the approval of mergers and acquisitions within their jurisdiction. In order to promote free competition, several laws have been established. In respect to mergers and acquisitions, European Union created the European Commission and gave it the responsibility to enforce these rules on a case-by-case basis by closely working with European national governments. As a means to understand EU competition policies, the following paper will seek to comprehend the reasoning and implementation of EU regulations by specifically examining the case study of the merger between Carrefour and Promodes.
[...] Nevertheless, the Commission used these two methods to raise competition concerns related to the relative size at the level of market shares in order to evaluate if this merger would result in Carrefour and Promodes becoming a dominant power. Another issue considered by the EC was the effect of the merger on employment. Employment is a key issue for workers and unions. Mergers have a strong possibility to eliminate jobs. In this case, the question was whether there would be enough expansion to offset these effects. [...]
[...] Moreover, their smaller service range and limited amount that they operate by means of limited distribution. However it was observed that in several countries the position of discount stores are beginning to take have a competitive relationship with hypermarkets that offer bargain prices (for example Leclerc hypermarkets in France). This is a questionable topic in regards to the evaluation of the merger because a misevaluation could result in a false perception of competition level. It is reasonable to consider the different distribution outlets involved in these two companies as separate entities (hypermarkets, supermarkets, and discount stores). [...]
[...] In their proposal, Carrefour and Promodes claimed that this cooperation would allow for optimal growth and overall benefit of the public. Both groups claimed that their joint operations would allow employees to reap benefits as a result of the creation of improved job prospects and diversification of opportunities in all countries of operation. On the supplier side, small and medium manufacturers as well as agricultural producers would have the possibility to expand. Additional opportunities for exportation of products would evolve on the market. [...]
[...] Due to both Carrefour and Promodes existing strong market presence, the European Commission was required to closely examine the facts of this particular case. According to the European Union, it is imperative for the Commission to examine the relevant market in both its product and geographic dimensions when evaluating competition cases. Based on Articles 85 and 86 of the Treaty, a relevant product market is made up of products and/or services that are viewed as necessary for consumers because of a product's characteristics, prices, or intended use. [...]
[...] III. How Promodes and Carrefour Came Together 1961: LLC Promodis, the origin of Promodes, was established. This company was formed through a merger between two wholesale companies in Normandy managed by Paul-Auguste Halley and Leonor Duval-Lemonnier. 1962: Promodes opens its first supermarket in Mantes-la-Ville (Yvelines), France. 1969: Promodes supermarket adopts the “Champion” brand name. Meanwhile, Carrefour opens its first supermarket in Belgium. 1972: Promodes supermarkets adopt become known as Continent. Additionally, the convenience store chain Shopi became part of Promodes. [...]
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