Breakingviews - France’s Carrefour defence targets wrong enemy

  • 1/14/2021
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LONDON (Reuters Breakingviews) - “An army marches on its stomach”, Napoleon reputedly said. Centuries later the French government is using a similar argument to protect its largest grocer Carrefour from a possible 16 billion euro takeover by Canada’s Alimentation Couche-Tard. Yet while concerns over jobs and supply chains have been given new prominence by the pandemic, a foreign owner is unlikely to threaten either. France has form in wrapping food purveyors in the tricolor. In 2005 the government vowed to protect “the interests of France” when American soft drink giant PepsiCo was sniffing around dairy group Danone. Finance Minister Bruno Le Maire echoed that sentiment on Wednesday when he said jobs and food sovereignty were key concerns in the possible takeover of Carrefour by the Canadian giant. Speaking during the Reuters Next conference on Thursday he added that such a deal would “be a major difficulty for all of us”. It’s far from clear that a sale would threaten French jobs, though. Couche-Tard’s mostly North American convenience stores and petrol stations have no overlap with Carrefour’s supermarkets. Unlike a manufacturer, the Canadian group could hardly move thousands of cashiers abroad. Indeed, supermarkets have hired more staff to keep shelves stocked during the pandemic. A change of ownership will make little difference. Concerns about security of food supply are more understandable. Bare shelves and global shortages of baby formula and toilet paper in March and April last year highlighted the importance of supermarkets and how they source essential goods. Buying food and other goods from local producers also supports the domestic economy. Yet France does not need to block a takeover to protect local suppliers. Emmanuel Macron’s government could require Couche-Tard to sign an agreement that a certain percentage of suppliers must be French. Even better, it could pass a law requiring all the country’s supermarkets, including Carrefour rival Casino, to buy a proportion of their products locally. Le Maire’s concern about domestic ownership is also at odds with Carrefour’s global footprint. France accounted for less than half of Carrefour’s 81 billion euros of revenue in 2019; the company is the largest cash and carry operator in Brazil. An upcoming election and the pressure of the pandemic mean Le Maire is right to worry about food supplies. But his defence is focused on the wrong enemy.

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