FAS: MAGNIT/DIXY MERGER IS POSSIBLE IF A NUMBER OF FUNDAMENTAL CONDITIONS ARE MET

FAS issued the most strict order aimed at preventing creation of a unified network that occupies a dominant position

The company undertakes to comply with the order, as well as to establish zero trade margins for certain types of socially significant goods

The antimonopoly authority granted the Tander JSC (Magnit retail chain) application to acquire the Dixy retail chain and Megamart stores, subject to full compliance with the FAS Russia order, which provides for a number of strict limitations.

Therefore, the merger of retail chains will take place only in those municipalities where the Magnit share does not exceed 25%. Thus, in 53 municipalities, 142 Dixy stores will not be merged with the Magnit retail chain, referring to municipalities in 12 subjects of the Russian Federation (in the Arkhangelsk, Vladimir, Leningrad, Moscow, Murmansk, Novgorod, Pskov, Smolensk, Tver, Tula, Yaroslavl regions and in the Republic of Karelia).

Furthermore, in order to protect competition and prevent the creation of a dominant position of the combined network, according to the order of the FAS Russia, Magnit and Dixy combined market share should be reduced within a year (until July 1, 2022) and not exceed 35% in 22 municipalities of 10 subjects of the Russian Federation (namely, in the Vladimir, Vologda, Leningrad, Murmansk, Novgorod, Smolensk, Tver, Tula, Yaroslavl regions and in the Republic of Karelia).

The Dixy retail chain is required to ensure the execution of all existing contracts in force at the time of the merger. The company is prohibited from creating discriminatory conditions in the market, restricting the access of suppliers and manufacturers to the goods market.

In the course of consideration of application the Tander JSC assumed additional obligations to establish zero trade margins for specific types of socially significant goods (milk, bread, chicken meat).

Also, the Magnit loyalty program for retirees will be extended to the Dixy and Megamart stores participating in the merger.

“During the consideration of the merger, we conducted a thorough analysis of possible negative consequences for the food trade market. The issued order is mandatory for execution and is aimed at preventing the emergence of a dominant position of the unified retail chain. Compliance with the requirements of the antimonopoly order will ensure the preservation of competitive and stable conditions in the market. One of the conditions for approving the transaction was the company's readiness to undertake obligations to sell certain types of socially significant goods such as milk, bread and chicken meat in the chain stores during the year without trade margins in principle,” said Maxim Shaskolskiy, Head of the FAS Russia.