Bulgaria's Competition Protection Commission has allowed German supermarket chain Lidl to acquire the Bulgarian stores of another German discount chain, Plus.
Thus, the watchdog has given green light to Lidl Bulgaria GmbH's acquisition of Plus Bulgaria Trade KD, Tengelmann Real Estate International Bulgaria KD, Bulgaria Trade EOOD, and Real Estate International EOOD. The Commission has decreed the immediate execution of its decision.
In June 2010, the European Commission referred the antitrust assessment of German supermarket chain Lidl's plans to acquire German retail group Tengelmann's Plus discount retail stores in Romania and Bulgaria back to the national competition authorities.
The Commission threw the fate of the takeover into the hands of Romanian and Bulgarian authorities at their request because a preliminary investigation of the deal showed it would affect competition in several local markets for daily consumer goods in Bulgaria and Romania.
Now that the Bulgarian competition authority has approved the deal, Lidl will take over Plus's 23 outlets in Bulgaria, which have a total of 820 employees. In Romania, Plus has 96 outlets with over 2000 employees. The deal marks the Lidl's entry into the two countries' markets.
German retailer Tengelmann decided at the end of February to sell its Plus discount retail chains in Romania and Bulgaria to its rival Lidl, which is part of Germany's Schwarz retail group. The price of the deal has not been disclosed.
According to realtors the economic crisis in the past year has proved fertile for the discount retailers stepping on Bulgarian soil in recent months and the country will see their boom in 2010.
Three German food discount chains are currently operating in Bulgaria: Kaufland, Penny Market and Plus.
The formal ruling issued by the Bulgarian Competition Protection Commission states that its detailed examination of the discount chains market points out that the Lidl takeover of Plus will have an impact on the retail trade of discount consumer goods but that it would not jeopardize and affect negatively the efficiency of competition of the market in question.
"The Commission found that the retail trade in Bulgaria is carried out through traditional (local, mixed shops, grocery shops, pavilions) and modern (retail chains) forms. The situation in the country shows that the traditional form is still preferred by the population because it lacks clear preferences for a certain commercial format, or stable consumer culture for a certain type of stores. The leading factors for the Bulgarian consumer are the good local, flexible working hours, and, most importantly, the price fluctuations; the result is that the switching to other outlets is easy," states the ruling.
The watchdog's analysis shows that the Bulgarian consumer retail trade features low concentration, with its modern forms (i.e. commercial chains) still occupying only 30% of the market. Yet, the market is characterized as dynamic and exhibiting gradual and stable influx of modern commercial forms.
The expectations are that the consumer retail trade in Bulgaria will grow slightly over time but that the share of the "modern" vs. the "traditional" outlets will rise steadily. At the same time, the traditional outlets will still continue to cover certain niches.