By Ahmed Salama
Recent plans announced by Carrefour to take over the Metro Market and Khair Zaman supermarket chains, led to fears of the creation of a new monopoly that would eliminate competition within the industry.
Experts said it was necessary for laws to be passed that would enable the government to combat monopolies and prevent such takeovers and mergers.
The President of the Egyptian Competition Authority (ECA), Mona Al-Garf, said that they learned of the deal through media sources, and that they had not been provided with any details until now.
She added that the ECA is currently considering a law which would allow it to monitor and dismantle any mergers or take overs that would threaten competition within the market. Al-Garf stated that until this law is passed, the ECA would not be capable of doing anything substantive to prevent such mergers.
The ECA has begun a series of meetings and discussions to assess the effects of this merger, and the extent to which it would create a new monopoly in the supermarket industry.
Mona Yassin, former head of the ECA, said the deal grants Carrefour 30 per cent control of the retail market and a near monopoly in Egypt’s most populated regions.
She added that this deal will make it very difficult for local, emerging retail chains to compete and will discourage further investment in Egypt’s supermarket sector.
Yassin further stated that the non-existence of any law subjecting such mergers to monitoring by ECA makes it incapable of doing anything practical to prevent the creation of monopolies. Any action taken by the ECA would be considered a mere suggestion which would not have the power to effect any real change in the market.
Ahmed Yahiya, head of the Grocer’s Division of the Cairo Chamber of Commerce, said that this deal would allow Carrefour to lower its prices to levels that would make it impossible for smaller chains to compete and obtain larger shares of the market.
Yahiya added that mid-level chains would be the most affected, and that they will not be able to compete with Carrefour without some intervention from the government.