FTC gives Lotte CVS go ahead to acquire Ministop Korea
Korea Seven's subsidiary Lotte CVS was given the final nod to go ahead with the acquisition of Ministop Korea by the Fair Trade Commission (FTC) on Tuesday.
Lotte signed a deal to acquire a 100 percent stake in Ministop Korea for 313.3 billion won ($256.8 million) from Japan's Aeon Group in January. While the antitrust regulator was assessing if the merger could go ahead, Lotte announced in a regulatory filing Feb. 25 that it will transfer share rights to Lotte CVS, making it the actual company acquiring Ministop Korea.
Lotte CVS is a special purpose company (SPC) wholly owned by Korea Seven, the licensee of 7-Eleven in Korea and an affiliate of Lotte. The SPC was established in February to acquire Ministop Korea.
After the deal is closed and shares are transferred, Ministop branches will change to 7-Eleven stores when each franchisees' contract with Ministop Korea expires.
The FTC said it approves the merger because the deal isn't expected to give one specific company dominance in the market.
GS Retail, the operator of GS25, had 35 percent of the market as of 2020 and BGF Retail, which operates CU, followed with 31 percent. Korea Seven came third with 20.4 percent.
Acquiring Ministop Korea, the No. 5 player, would bump up Korea Seven to a 25.8 percent market share. The FTC says this will boost competition between the top three players and enhance service and product quality.
It added that convenience stores face competition with smaller discount marts in the neighborhood. Online restaurant delivery companies such as Coupang Eats and Baedal Minjok are also delivering food and daily items sold at convenience stores, another group of competitors that will prevent the company from exerting dominance.
Regarding concerns that Lotte's food companies — such as Lotte Chilsung Beverage and Lotte Foods — could discriminate against other convenience stores when they supply their food products, the FTC said it wouldn't be a problem considering Lotte companies have never done so in the past and that there are many other food suppliers that can be substituted.
BY LEE TAE-HEE [email@example.com]