Wednesday 14 November 2018

Tesco partnership with French giant Carrefour to launch in October

The deal has become the subject of a probe by French competition authorities.

Tesco is planning to use the deal with Carrefour to bring down prices (Nick AnsellPA)
Tesco is planning to use the deal with Carrefour to bring down prices (Nick AnsellPA)

By Helen Cahill, Press Association City Reporter

Tesco has said its strategic partnership with France’s Carrefour will become operational in October.

The UK supermarket has now formally entered into its strategic alliance with Carrefour, under an arrangement that has been set out for a three-year period.

In a statement, Tesco said the relationship will cover global suppliers, and will allow for the joint purchasing of own-brand goods and store equipment such as trolleys, fixtures and cleaning supplies.

Tesco first announced the deal in July, saying it would improve the quality and choice of products available to its customers.

The supermarket is also aiming to lower prices on the back of the deal as it fends off competition from the likes of Aldi and Lidl.

The move came after Sainsbury’s promised lower prices on a range of everyday items as part of its planned £12 billion merger with rival Asda.

However, French regulators are probing the Tesco-Carrefour relationship to understand what impact it could have on suppliers.

The Autorite de la Concurrence said it was looking into the competitive impact of the purchasing agreement to assess its effect on the food sector, both for suppliers and consumers.

The regulator is also investigating similar alliances between France’s Auchan, Casino, Schiever, and Germany’s Metro, and Carrefour and Systeme U.

The probe has been set up because a new wave of agreements between grocers are larger in scale than the deals signed previously.

Moody’s credit ratings agency has also said that grocery tie-ups will squeeze suppliers.

The agency said lower purchasing costs would ultimately lead to lower revenue for suppliers across the board, even if the supermarkets offer to buy in larger volumes as part of new agreements.

Press Association

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