Supermarkets have not become more expensive following mergers
The supermarket mergers have not had any effect on the prices that consumers pay for their products in supermarkets. This is the main conclusion of the study that the Netherlands Authority for Consumers and Markets (ACM) has had carried out into three major supermarket mergers between 2009 and 2012, which involved hundreds of supermarket stores of three Dutch supermarket chains: Jumbo, C1000 and Super de Boer. In addition, it turns out that, after the mergers, product variety in virtually all supermarkets has increased. In several towns, the increase in product variety as a result of the merger was slightly less.
Chris Fonteijn, Member of the Board of ACM, is content with the findings: “The study confirms that ACM uses the right approach in its assessments of the effects of supermarket mergers on consumers.” He notes that the conditions that ACM had imposed were effective. During the merger, the supermarket chains had to sell stores in several cities or towns. That way, consumers continued to have a choice, and competition between supermarket chains was retained.
No effect on prices
Supermarkets hardly compete on price at a local level. Prices are mostly determined at a national level. The study has revealed that the mergers did not result in price increases.
Small effect on product variety
Consumers have more choice in their supermarkets if a higher number of different supermarkets remain in their town after a merger. This means more products within a single category, so for example, not just nine different brands of wine or detergent, but ten of them. The findings show that, in virtually all supermarkets, product variety has increased after the merger. However, in towns where the number of different supermarkets dropped as a result of the merger, the increase in product variety was slightly less. This effect has been partially offset by the fact that, in several of these towns, a supermarket store had to be sold.
Merger assessments by ACM
Before a merger takes place, ACM assesses whether there are any anticompetitive concerns. If competition is restricted, prices may increase or product variety may be reduced. ACM wishes to prevent such consequences as much as possible. ACM may clear mergers, block mergers, or impose conditions in order to prevent any reduction of competition. In the case of supermarket mergers, a condition could be the divestiture of stores in a city or town to a competitor, leaving consumers with sufficient choice. This was the case in all three mergers that were examined in this study. Between 2009 and 2012, over 20 stores were sold to competitors as a result of ACM’s assessment.