Loblaw Cos Ltd.’s $12.4-billion acquisition of Shoppers Drug Mart Corp. will close next week under a deal with the country’s Competition Bureau after agreeing to sell 18 stores and nine in-store pharmacies — but not without some conditions related to how the grocery giant deals with its merchandise suppliers.
The pending closure of the blockbuster deal to merge Canada’s biggest chains in their respective retail sectors was announced Friday, in line with the expected time and with minimal store divestitures required.
But the Bureau’s deal with Loblaw nevertheless places “behavioural restrictions” on its programs and agreements with suppliers, to prevent vendors from getting squeezed by large industry players.
Amid a pitched battle and sliding margins in the retail food sector and stiffer competition from Walmart, Costco and Target, consumer goods suppliers have complained grocers have been increasing vendor fees, fees suppliers are charged by retailers for shelf placement, promotions and marketing programs.
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Date: Mar 21, 2014