December 6, 2018 / 10:30 PM / 4 days ago

Costa Rica competition regulator blocks Walmex acquisition

FILE PHOTO: A general view of a Wal-Mart store in Mexico City, April 24, 2012. The banner reads, "Low prices, every day, in everything". REUTERS/Edgard Garrido//File Photo

MEXICO CITY (Reuters) - Wal-Mart de Mexico said on Thursday Costa Rica’s competition regulator had notified the company that it opposes its plan to buy 52 local supermarkets, which would grow its store tally in the Central American nation to more than 300.

The retailer known as Walmex (WALMEX.MX), a unit of U.S.-based Walmart (WMT.N), already has 252 stores in Costa Rica, which is one of its worst-performing Central American markets.

The company said in July that it had agreed to buy Grupo Empresarial de Supermercados’ stores in Costa Rica as part of a growth plan for the region. It did not disclose the price.

Walmex said in a statement on Thursday that the acquisition would be positive for competition and for consumers. It was considering how to respond to the regulator, the Commission for the Promotion of Competition (COPROCOM), the company added.

Walmex and Grupo Empresarial de Supermercados have three days to appeal, said the head of the regulator, Rodolfo Chevez, in a phone interview. It will then issue a final decision in mid-January.

The regulator fears the deal would give Walmex enough market power to be able to alter prices, exclude competitors or affect suppliers, Chevez said.

“It wasn’t seen as a benefit to the market,” he said.

Walmex also operates in Guatemala, El Salvador, Honduras, Nicaragua and Mexico, its largest market by far with 2,400 stores. Costa Rica was the second-worst performer in the third quarter this year by same-store sales. Its weakest market was Nicaragua, where political turmoil caused sales to drop.

Reporting by Daina Beth Solomon, Editing by Rosalba O'Brien

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