Mexico blocks Walmart’s acquisition of Cornershop

By Niamh Michail

- Last updated on GMT

Walmart acquisition of Cornershop blocked by Mexican authorities

Related tags e-commerce acquisition

Mexican regulatory authority COFECE has blocked Walmart’s acquisition of e-commerce platform Cornershop on the grounds it could hinder competition.

Founded in 2015 by two Chilean entrepreneurs and one Swedish entrepreneur, Cornershop has expanded to become a leading online marketplace for on-demand delivery from supermarkets and pharmacies in Mexico and Chile.

The US grocery giant announced in September last year ​its intentions to acquire the company for US$225 million.

In January this year, the Chilean regulatory body, Fiscalía Nacional Económica (FNE) gave the green light for the acquisition to go ahead in the South American country.

Last week, however, Mexico’s COFECE said the proposed transaction would give Walmart “sufficient market power to hinder, diminish, damage or impede competition” ​in the field of e-commerce grocery shopping and distribution.

The merger had been seen as something of a game-changer in Latin America's e-commerce market. Jack O'Leary, senior analyst at PlanetRetail RNG, told this publication previously, it had “raised the stakes”.

Cornershop does not communicate the number of app users but Walmart said in September 2018 said the number of users had doubled in the 12 months prior.

According to COFECE regulators, however, the terms of the proposed acquisition presented several risks. Cornershop could refuse to provide its services to Walmart’s competitors, for instance, while Walmart could stop listing its products on competing Cornershop platforms.

In Mexico, its other partner stores include Costco, OfficeMax, and Chedraui Selecto.

"The Federal Law of Economic Competition allows economic agents to present conditions to eliminate the risks to the process of competition identified of carrying out the operation,​" said COFECE. "In this case, the commitments proposed by Walmart and Cornershop MXwere insufficient to avoid the possible negative effects of the concentration

Therefore, the Plenary of the Commission resolved not to authorize the concentration​”, it ruled.

Walmart also has an e-commerce presence in Argentina through Mercadoni and MercadoLibre.

Last month, Walmart Brasil announced plans to close its e-commerce operations in Brazil in order to focus on brick and mortar stores, transforming hypermarkets into wholesale stores.

In order to use Cornershop, individuals download the app and use it to buy products from both large supermarkets and specialty stores.

They can buy products from many stores at once, adding the items to their cart and selecting a specific delivery time.

A Cornershop ‘personal shopper’ then buys the groceries and delivers them within one hour. According to the company, the personal shoppers are “trained to pick the best fruits and vegetables”.

Users can also add comments for the personal shopper. “This feature is especially useful to describe how you want your fruit, vegetables or perishables,”​ the company says. “For example, ‘I want the bananas to be ready to eat today’ or ‘I want the slices of the ham to be very thin’.”

Depending on the store in question, it adds a service charge of between 6% and 18% of the product’s price and a surcharge for any deliveries over 6 km.

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