Carrefour and Tesco end buying alliance

  •   11/06/2021 - 12h42
  •   DEHOUI Lionel

The buying alliance between Carrefour and Tesco UK was established in 2018. It will end in December and will not be renewed. It's a partnership with a focus on private label group buying.

Carrefour and Tesco end buying alliance

The two competitors are free again

Carrefour and the British retailer Tesco have just announced that they have decided not to extend the purchasing alliance beyond the operational framework. This is for three years as agreed in 2018 and is due to officially end on 31 December 2021. The alliance mainly focuses on group purchasing of products for own brands.

It also focuses on off-market purchases (store equipment, etc.) and service sales. The two companies said in a statement that they have benefited from various joint purchasing opportunities in the food and non-food categories over the past three years.

Also, they have secured new suppliers, new sourcing and new services. However, for the future, both companies have agreed to continue this work independently. In particular, they will build on the experience and progress made during the implementation of the alliance.

 

An alliance screened by the Competition Authority

Last year, the Competition Authority took an interest in the private label section of the alliance. As a result, an investigation into the alliance revealed competition problems. The French authorities were mainly concerned about the risk of weakening suppliers.

As a result, given the situation, Carrefour and Tesco proposed to remove several families of fruit and vegetables from the scope of the agreement. They also proposed to restrict joint purchasing of certain products. But, until the end of this year, the two partners did not specify whether regulatory restrictions were the reason for their decision.

Nor did they indicate whether there were other reasons for suspending the cooperation. For its part, the competition authorities were concerned that the agreement between these groups, on their own brands, would lead to the homogenisation of these products, thus reducing competition between them.

 

Carrefour signs a new partnership

In fact, Casino, Metro, Auchan and Schiever, have also experienced the same situation. They also had to reduce the scope of their agreement to avoid any risk of harm to competition. Later, Casino announced the end of the alliance to conclude a new one with Intermarché. The new agreement will run for five years and will cover products purchased from major international manufacturers.

Going in the same direction, Carrefour announced a month ago that it had entered into a new distribution partnership for its own brands. The agreement was concluded with Coop Nordics and private labels can now be sold in its stores.

The partnership was signed by Carrefour Partenariat International and Coop Trading, as well as four of its subsidiaries. The latter are those located in Finland (SOK Group), Denmark (Coop Denmark), Norway (Coop Norway) and Sweden (Coop Sweden). The agreement will allow these affiliates to purchase Carrefour's private labels. The agreement covers both food and non-food supplies.