The Autorité de la concurrence clears the acquisition of Jardiland group
by InVivo group (Gamm Vert, Delbard) subject to divestiture of 11 stores
Parties to the transaction
On 29 June 2018, InVivo Retail group, a subsidiary of InVivo cooperative union, which operates among others a chain of retail outlets under the Gamm Vert and Delbard banners, notified the Autorité de la concurrence of its intention to acquire Jardiland group.
The parties are retail distributors of gardening, DIY, pet and landscaping products.
InVivo has made commitments to address competition issues identified in several catchment areas
While the transaction poses no problem with regard to competition in the upstream market for procurement from suppliers given the new entity's limited market share at the national level, the Autorité does consider that it would create a serious risk tocompetition in several local catchment areas.
The Autorité considered that, following the transaction, InVivo Retail would have held very significant market shares, exceeding 60%, in several catchment areas and there would be no credible and sufficient alternative to counterbalance its market power. In each of these areas, acquiring control of the company-owned Jardiland or franchise L'Esprit Jardiland stores was likely to result in local price increases or a less diverse range and lower quality of products and services, as the transaction would have eliminated a product offering competing with the stores under the Gamm Vert or Delbard banners. In each of the affected areas, the Autorité noted that consumers would be deprived of an alternative, with competitors remaining in those areas likely to be incapable of exerting adequate competitive pressure on the new entity.
To assure dynamic competition in the affected areas, InVivo will divest itself of 11 stores
The Autorité has nonetheless cleared the transaction, subject to the divestiture of six outlets and the termination of five franchise contracts, which must be taken on by one or more competing chains1.
To allay these competition concerns, InVivo group committed to sell six Jardiland or Gamm Vert retail outlets to a competitor, and to terminate five Jardiland or Gamm Vert franchise agreements by facilitating the negotiation of a new franchise agreement by a competing chain. These commitments are intended to ensure that adequate competition is maintained in the affected areas.
The potential buyers will have to be approved by the Autorité, which will ensure that they are likely to provide a credible alternative offering for gardening, DIY, pet and landscaping products in each of the affected areas.
The outlets affected by the commitments are as follows:
1As one of the potential divestitures is subject to the prior agreement of the board of the cooperative that operates the affected store, termination of a sixth franchise agreement for another store in the area displaying the same characteristics as the first store could be substituted.
2In Vivo committed to terminate the Gamm Vert franchise agreement for the outlet in Perreux and to sell the outlet to a competitor. However, any such sale is subject to the approval of the board of Euréa. If the board were to reject the sale, the notifying party committed to terminate the franchise agreement for another store in the area.
|The divestitures mean that stores will change retailer rather than close
The required divestitures are justified by the disappearance of local competitive pressure on the new entity after the transaction.
Their purpose is to enable stores and their businesses to be taken over by a chain other than Jardiland, Gamm Vert or Delbard in order to maintain dynamic competition in the affected catchment area and ensure that consumers have continued access to a diversified offering of gardening, DIY, landscaping and pet products.