Tesco’s (LON:TSCO) deal with Carrefour has come under scrutiny in France, with the country’s competition watchdog opening a probe into the impact of such tie-ups. The two companies agreed a long-term partnership earlier this month, with the deal to cover the relationship with global suppliers, the joint purchasing of own brand products and goods not for resale.
Tesco’s share price has climbed marginally higher in today’s session, having gained 0.47 percent to 256.00p as of 09:51 BST. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing at 7,599.96 points, flat in percentage terms. The group’s shares have added more than 46 percent to their value over the past year, as compared with about a 2.8-percent gain in the Footsie.
France probes Tesco-Carrefour deal
France’s Autorité de la concurrence announced in a statement yesterday that it was deepening its investigations and opening enquiries into joint purchasing agreements in the food retail market sector, including Tesco’s deal with Carrefour.
“The Autorité decided to reinforce its investigations into these purchasing agreements, and opened, for every alliance, an inquiry in order to assess the competitive impact of these purchasing partnerships on the concerned markets, both upstream for the suppliers, and downstream for the consumers,” the watchdog explained in the statement.
“What good is a cheap market if suppliers all go out of business?” commented Mike van Dulken, head of research as Accendo Markets, as quoted by City A.M. “There’s a balance between healthy competition, competitive pricing and longevity.”
Analysts on FTSE 100 supermarket
The 16 analysts offering 12-month price targets for Tesco for the Financial Times have a median target of 275.00p, with a high estimate of 300.00p and a low estimate of 200.00p. As of July 13, the consensus forecast amongst 22 polled investment analysts covering the blue-chip grocer has it that the company will outperform the market.