Merger clearance of transactions in the retail sector is expected to be subject to stricter scrutiny by the Romanian competition authority

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The Romanian Competition Council (RCC) has announced it will change the clearance procedures for mergers and acquisitions in the food retail sector in terms of geographic market definition, in light of changes in the conduct of both market players and consumers.

The RCC draws a distinction between two categories of retail stores, based on a 400 sqm threshold. The first category consists of proximity stores, having a surface below this threshold (convenience stores and other small retail outlets), while the second category comprises retail stores with a surface above 400 sqm (supermarkets, hypermarkets, etc).

The analysis showed most of the consumers prefer to walk for maximum 10 minutes in order to reach a proximity store (given the limited variety of products, usually covering an urgent and occasional need, and the lack of parking facility), and to drive for 10 minutes in order to reach a supermarket (with consumers interest in supermarkets increasing lately).

Thus:

  • when analyzing the relevant market of a store of over 400 sqm, all existing stores in a 10 minutes driving distance will be taken into consideration.
  • when analyzing a proximity store (with a surface below the 400 sqm threshold), RCC will consider other proximity stores (with a surface of less than 400 sqm) in the area of 10-minute walking distance from the relevant store, but also large or medium stores (modern retail) in the area of a 10-minute driving distance.

As a result, merger clearance of transactions between competitors might become more difficult, depending on market concentration within the 10-minute area around the stores.

The full report, currently subject to public consultation, can be accessed here.

Georgeta Dinu (Partner), Alexandru Sotropa (Associate)

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