The French Competition Authority (FCA) has conditionally approved Cofepp’s acquisition of Marie Brizard Wine & Spirits (MBWS). Both are producers of alcoholic beverages whose activities mainly overlap in the production and distribution of spirits. Cofepp (which includes La Martiniquaise and Bardinet) is France’s second-largest spirits group and was advised by CRA in the merger proceedings.
Cofepp produces a wide range of spirits such as Cruz Port, Label 5 whisky, Poliakov vodka, and Tiscaz and José Cuervo tequila. MBWS is also active on the spirits markets with a brand portfolio including Pitters port, William Peel whisky, Sobieski vodka and San José tequila.
The FCA’s concerns concentrated on the whisky, vodka, tequila and port markets. Remedies were only required on the tequila and port markets through the divestment of Pitters port and Tiscaz tequila brands. Regarding the whisky and vodka markets, the FCA ruled out any risk of substantial lessening of competition despite high market shares given the presence of numerous alternatives for consumers and strong competitive constraints stemming from mass retailers.
The decision notably hinged on two results of the economic assessment. First, retailers exert material constraints via their own private labels, which should not be considered as a separate market. Second, retailers’ buyer power represents a major countervailing force sufficient to restrain any price increase incentive of the new entity. As evidenced by past bargaining outcomes, retailers’ countervailing force can even take the form of a complete delisting of a producer’s products if conditions offered by that producer are not deemed satisfactory.