The
Malta’s Office for Competition (“the Office”) has issued a press release, noting that on the 18 September 2024, it issued a decision prohibiting the acquisition by Lidl Immobiliare Malta Limited (“Lidl”) of property owned by Said Investments Limited and leases belonging to another major supermarket chain on the island (“Scott’s”) bringing a tentative end to an ongoing saga of attempts by Lidl to acquire Zabbar properties belonging to Scott’s.
Background
On 9 June 2021 the Office issued a decision, further to a Phase II investigation that had been launched under regulation 6(1)(iii) of the Control of Concentrations Regulations (Chapter 379.08 of the Laws of Malta) (“Merger Control Regulations”) approving the acquisition by Lidl of properties belonging to Scott’s, following Lidl having excluded properties (specifically those based in Zabbar) from its original notification.
A further Phase II investigation was launched on 10 November 2021 following another notified acquisition by Lidl to purchase the same properties in Zabbar used by Scott’s. This acquisition was subsequently abandoned by Lidl and the investigation terminated by means of a statement issued in February 2022.
On 29 December 2023 another Phase II investigation was launched following a further notification to the Office by Lidl to purchase properties in Zabbar used by Scott’s. The According Under regulation 3(2) of the Merger Control Regulations, any transactions that take place within a two-year period between the same persons or undertakings are to be treated as one and the same concentration.
Substantive Assessment of the Concentration
The Office considered the competitive constraints on Lidl both pre- and post- concentration, using a counterfactual analysis to compare the market outcome of the concentration with the prevailing market environment in its absence In doing so, it also considered the potential for entry, exit, and expansion by both new entrants and existing market players, the likelihood of such changes materializing, the timeliness of entry and expansion and the meaningful influence of such new competitive constraints on the relevant market.
The product market was defined as that for retail groceries. The The Office considered that the relevant radius within which competitive constraints would be felt would be a 15-minute drive from the properties to be purchased.
The Office found that the acquisition by Lidl of Scotts (Zabbar) would have further strengthened Lidl’s already dominant position on the retail grocery market in the south of Malta and result in an increase in concentration on an already concentrated market.
Its assessment led the Office to conclude that the acquisition by Lidl of Scott’s properties in Zabbar might lead to the substantial lessening of competition on the grocery retail market in the south of Malta and should therefore be prohibited in line with regulation 8(3) of the Merger Control Regulations.
Merger Control notification in Malta
The Control of Concentrations Regulations (Chapter 379.08 of the Laws of Malta) (“Merger Control Regulations”) make it a legal requirement for all concentrations to be notified to the Office.
A concentration would arise in the following situations:
The merging of two or more undertakings that were previously independent of each other;
- the acquisition by one or more undertakings or by one or more persons already controlling at least one undertaking of direct or indirect control of the whole or parts of one or more undertakings. This may take place by purchase of securities or assets, by contract or by any other means;
- the creation of a joint venture performing on a lasting basis all the functions of an autonomous economic entity.
- AND where in the previous financial year the aggregate turnover in Malta of the undertakings concerned exceeded
EUR2,329,373.40 and each of the undertakings concerned had a turnover in Malta equivalent to at least 10 percent of the combined aggregate turnover of the undertakings concerned.All concentrations are required to be assessed by the Office to determine whether they will lead to a substantial lessening of competition in the Maltese market or part thereof. The A concentration shall not be put into effect without it having been notified to the Office for Competition.
Notification of concentrations is required within 15 days from the conclusion of the agreement, the announcement of the public bid, or the acquisition of a controlling interest.
Failure to notify a concentration may lead to the concentration being unwound and to a fine on any persons, undertakings or association of undertakings of EUR50,000 or 1% of the total worldwide turnover of the undertaking or association of undertakings concerned in the previous business year, whichever is higher.
Next Steps
The Office will publish the full version of the decision once confidential and business secrets are removed from its original decision. The Within
