RIMI creates near monopoly with Interpegro market purchase

  • 2000-02-10
  • Valters Medenis
RIGA - Rimi supermarket chain, owned by ICA Baltics in Latvia, has acquired 13 stores from their competitor, Interpegro, owned by the company Wenden LLC. Interpegro will use the proceeds to diversify its investments, said its president, Benjamins Gurenvics.

The deal, made last year, needed clearance from the Latvian Competition Council which said on Feb. 1 that approval was unnecessary for Rimi's takeover of Interpegro.

That decision made Rimi the largest food chain in Latvia and left owners of independent markets wondering about the effects of Rimi's possible monopoly of the food distribution market. Lower prices from increased purchasing power will make it harder for other markets to compete effectively.

Halvor Moria, the president of ICA Baltics, has not yet released the figures of the sale, but said the amount was large enough. Rumors say the price was in the tens of millions of lats.

No decisions have yet been released on when and how the Interpegro stores will be taken over and what changes will occur in those stores acquired by Rimi.

Last year Interpegro had trading figures of around 23 million lats ($138 million), and Rimi reported a turnover of roughly 22.2 million lats. ICA AB, the Scandinavian owners of ICA Baltics has already acquired one of Lithuania's largest supermarket chains and along with stores in Estonia, is the largest supermarket chain in the Scandinavian and Baltic region with 4,600 stores.

The only real competition to the supermarket giant is the Norwegian owned supermarkets Sky and other smaller independent stores.

Employees of these stores, when questioned, were doubtful that the merger will lead to an even share of the market for themselves pricewise. ICA Baltics, with its already popular consumer base through their advertising, will now have much more purchasing resources when it comes to buying from wholesalers.The other stores are afraid that, with Rimi's acquisition of Interpegro, the super chain's bargaining power with wholesale distributors will lead to lower prices for consumers, leaving smaller stores unable to compete.

ICA AB has already said the purchase of the Interpegro stores will only benefit Latvian consumers with newly acquired purchasing power and give them more value for money.

It will be of interest to consumers and other supermarket retailers to see how the Rimi supermarkets either integrate or run the Interpegro stores they have purchased. Businesses now have to just wait and see how the purchase will affect their sales figures while consumers, according to ICA AB, will receive benefits to their back pockets.