E-Mart okayed to acquire Kim’s Club Mart

The Fair Trade Commission on Wednesday gave the green light to E-Mart, the nation’s No. 1 supermarket chain, to acquire Kim’s Club Mart’s 53 outlets.

The antitrust regulator said the acquisition will have a limited impact on the existing competition of super supermarkets, or SSM.

“There was less than 3 percent increase in E-Mart’s market share within the SSM sector following the acquisition,” said a FTC official.

When it comes to small vendors in the neighboring business districts, the FTC also said that no serious business impact is expected.

The decision is the first case in which the government judged SSMs separately within the retail industry. It is expected to be considered a precedent in future cases.

In May, E-Mart took over 98.69 percent of shares in Kim’s Club Mart from E-Land Group, a leading fashion retailer.

The sales price is estimated to exceed 200 billion won ($175.9), according to industry sources.

Due to E-Mart’s dominant market share of 37 percent within the industry, the deal stirred concerns about a retail monopoly.

Industry watchers say that the company may have decided to target residential and downtown areas with smaller chains, with the retail industry quickly becoming saturated.

“A growing number of consumers prefer to buy a small amount of products whenever they need. Smaller marts would be more convenient for them to use,” said a source.

The retail giant currently operates 133 “E-Mart” outlets nationwide and has only 24 smaller chains. With the acquisition, the number surged to 77.

E-Mart has been slow to expand business into the SSM sector, compared to its rivals No. 2 Homeplus and No. 3 Lotte Mart that have dominated the market with 313 and 244 stores, respectively. GS also owns 209 SMM locations.

“We will operate the newly acquired SSMs differently from existing stores,” said an E-Mart official, declining to reveal further details.

Kim’s Club Mart is a SSM chain that E-Land purchased in 2005 when it acquired a retail unit of Haitai.

It logged 285.9 billion won in sales and 2 billion won in operating profits last year.

By Lee Ji-yoon (jylee@heraldcorp.com)