Cade demands sale of stores to authorize purchase of Big by Carrefour

Cade (Administrative Council for Economic Defense) must authorize the sale of the Big retail chain to the Carrefour group, provided that part of the stores involved in the business are sold. The exact number of units and locations are kept confidential by the antitrust authority.

The deal involves the 388 stores of several brands of the Big group and the decision will be taken in the judgment session of the municipality this Wednesday (25).

Carrefour is the largest retail group in Brazil, with 722 units — including Atacadão, which will acquire Big. In 2020, the group’s revenue was R$ 74.8 billion.

Big was the sixth largest retailer in the country in the same year, with a turnover of R$ 25.2 billion. After the green light from Cade, the combined operations will have more than a thousand points of sale. The second largest retailer in the country, the Pão de Açúcar group, has more than 800 stores.

The operation was announced in March last year for R$ 7.5 billion. On January 24 this year, CADE’s General Superintendence, the body’s first instance, sent the final decision to the body’s administrative court and suggested approval through the sale of a package of assets already negotiated with the companies.

With CADE’s endorsement of the agreement negotiated between the General Superintendence and companies, Carrefour’s idea is to integrate the various brands into Atacadão, the group’s brand for hypermarkets and cash-and-carry.

The Big group has six brands: Maxxi, Sam’s Club, Big, Super Bompreço, Nacional and TodoDia. Carrefour declined to comment on the report. Big didn’t respond until closing.

In addition to the growth in the number of stores and revenue, the acquisition will allow for a geographic expansion of the Carrefour group. In the justification for the operation sent to Cade, the company said that “about 70% of Carrefour stores are in the Southeast, while 82.2% of Big stores are primarily in the South and Northeast”.

Thus, pointed out the General Superintendence, the purchase “would make it possible to expand in regions where the Carrefour Group has a ‘comparatively limited presence, such as the Northeast and South of the country'”. In addition, the operation “also represents the opportunity to enter market segments in which the Carrefour Group is not present”, such as the shopping club.

Big owns Sam’s Club, which operates in this segment. In establishments of this type, the consumer has to pay a monthly fee to have access to the place and buy what is sold there.

At first, the General Superintendence identified possible problems in 127 units that were being acquired. Then, after an in-depth analysis of the competition at these store locations, most concerns were allayed.

The remaining concerns were resolved after an agreement was signed between CADE’s first instance and the companies. This agreement is what will be ratified by CADE’s administrative court.

In addition to the sale of assets, the agreement also involves commitments that prevent Carrefour from repurchasing the units sold for five years and maintaining their economic viability while they still belong to the Carrefour group. The stores can be sold both to new entrants and to companies that already operate in the cities where they are located.

In addition to the stores, the purchase also includes wholesale distribution activities and some gas stations that belong to Big. In these two markets, Cade saw no competition problems due to the low participation of companies in both markets.