May 24, 2016 / 9:26 AM / a year ago

French competition body to probe Auchan-Systeme U retail deal

The logo of French grocery retailer Auchan is seen on shopping trolleys near its hypermarket in Kiev, Ukraine, March 21, 2016.Gleb Garanich

PARIS (Reuters) - France's competition authority is launching an in-depth probe to assess whether a purchasing and store-swap alliance between French supermarket retailers Auchan and Super U owner Systeme U threatened competition rules.

A preliminary examination has shown the deal could have an impact on food and consumer goods supply and distribution markets, a statement from the authority said on Tuesday.

During the in-depth phase, the authority will look notably at competitive pressure from the alliance exerted by "click and collect" stores on other store formats, and review the consequences of the deal on suppliers.

The deal between France's fifth and sixth largest retailers mainly involves cooperation on purchasing, which means they will benefit from greater power in negotiating with suppliers, but also includes an arrangement under which they swap stores to optimize efficiency.

The Auchan-Systeme U deal follows a flurry of alliances sealed in France in recent years by Casino (CASP.PA) with Intermarche, and market leader Carrefour (CARR.PA) with Cora/Supermarches Match in order to save on costs amid a price war among retailers.

Reporting by Dominique Vidalon; Editing by Andrew Callus

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