Sobeys bags Safeway after agreeing to divestitures
October 24th, 2013
The Competition Bureau has announced that it has entered into a consent agreement with Sobey’s which addresses the Bureau’s concerns arising from Sobeys’ proposed acquisition of substantially all of the assets of Canada Safeway.
During the merger review process, the Bureau concluded that the proposed merger would likely lead to a substantial prevention or lessening of competition in retail supply of a full-line of grocery products in certain areas in Western Canada. As a result, the consent agreement calls for Sobey’s to divest 23 grocery stores businesses in the affected areas of Alberta, British Columbia, Manitoba, and Saskatchewan.
The relevant product market in the Bureau’s analysis of this merger was the retail sale of a full-line of grocery products that allows consumers to purchase the complete range of grocery products in a single location. This market consists of national retailers such as Loblaws and Sobey’s, as well as regional retailers such as Overwaitea and Calgary Co-Op.
Analyzing the geographic markets, the Bureau concluded that in most local markets, regional and local competitors will act as effective remaining competitors after the transaction is completed. However, in certain local markets, the parties to the merger have significant market share and the extent of other competition is limited. The Consent Agreement only targets these specific local markets.