PX Mart fined NT$20 million for failing to honor merger condition

Taipei, April 22 (CNA) PX Mart has been fined NT$20 million (US$613,497) by the Fair Trade Commission (FTC), which said on Monday that the leading supermarket operator in Taiwan failed to observe a condition set by the FTC in 2022 for the approval of a merger between PX Mart and hyper market chain RT-Mart.

In a statement, the FTC said a meeting convened by FTC members on April 17 concluded that after acquiring RT-Mart, PX Mart asked merchandise suppliers to provide the same discounts agreed with other distributors when they applied with the supermarket chain to place their new products on its shelves or raise product prices.

The meeting also found that PX Mart used the pricing its merchandise suppliers agreed with other distributors as a reference when they negotiated with the supermarket chain during product promotion campaigns, the FTC said.

The findings showed PX Mart failed to honor one of the seven conditions imposed by the commission when it approved the merger application in 2022, which prohibited PX Mart from applying the most favored pricing clause to its merchandise suppliers.

The failure to observe that condition effectively transferred the risks caused by competition between PX Mart and other retailers to its merchandise suppliers, imposing an unnecessary financial burden on them, the FTC said.

Although PX Mart's failure to honor the condition ostensibly increased benefits for consumers by marking low prices for goods on its shelves, the reality is that the move aimed to maintain its own profit margin by undermining competition in the distribution channel.

The FTC cited the Fair Trade Act, which stipulates that companies failing to perform undertakings required by the FTC face a fine ranging from NT$200,000 to NT$50 million.

In addition to a fine, the FTC also has the power to ask a company that fails to observe such conditions to split, dispose of all or part of the shares, transfer part of its operations, or remove certain persons from their positions.

Among the other conditions imposed for the merger with RT-Mart, PX Mart was requested to maintain its existing policy of allowing suppliers to obtain shelf space without paying upfront payments for at least three years after the merger.

In December 2021, PX Mart offered NT$11.5 billion to take over 95.97 percent of the shares in RT-Mart from France's Auchan and the Ruentex Group, following months of negotiations involving several rounds of offers and counteroffers.

Despite the merger, PX Mart has maintained RT-Mart as a separate brand and retains its current management team.