CMA CGM Must Divest in French Polynesia to Win Approval for Bolloré Deal

 

Opposition to the pending $5 billion acquisition of Bolloré Logistics by CMA CGM emerged from the authorities in French Polynesia. In a statement released yesterday, February 6, they reported that they have reached an agreement with the company to address concerns over domination in the freight and logistics market between Europe and French Polynesia that could emerge from the acquisition.

CMA CGM Group recently reported that it is poised to “soon complete” the acquisition of Bolloré Logistics to further bolster the group’s freight management scale and industry reach. The French group reported that it had reached terms for the acquisition in May 2023 which would make CMA CGM among the top five global logistics companies.

The Polynesian Competition Authority received an application in October 2023 for approval for a possible market concentration under the Polynesia Competition Code. While they noted CMA CGM’s worldwide transport of containers, the initial filing highlighted that the company’s CEVA Logistics is only marginally directly active in French Polynesia and only in the market to organize services for the transport of goods. Bolloré Logistics they initially indicated was not active in the logistics services sector in French Polynesia.

The authority, which says its role is to ensure the competitive structure of the market in French Polynesia, however after closer examination determined the “buyout raised a risk of blocking access of freight forwarders to transport services with CMA CGM containers and the risk of increases in the price of services as well as a possible impact on the selling price of goods to the consumer.

Their review showed that Bolloré Logistics carries out services organizing the transport of goods, while essentially managing the import flow. While it does not offer logistic services or organize land transport services, they noted it holds a minority stake in a freight forwarder, Transit et Transport International Tahiti. 

The authority confirmed that CEVA only organizes transport in a very marginal way in French Polynesia, but they highlight that CMA CGM ensures territorial continuity between French Polynesia and Europe through its Panama Direct route. The carriers’ Pacific Coast route also connects French Polynesia with the West Coast of America. 

They expressed concern that the new entity created in the merger would have had a “high-capacity blocking access to maritime transport of goods on the Europe-French Polynesia route.” They found the CMA CGM has a “quasi-monopoly” on the route and with the acquisition of Bolloré Logistics Polynesia would have added to its dominant position. The Polynesian Competition Authority concluded the transaction was “likely to harm competition.”

Addressing the competition concerns, they have agreed to a settlement that undertakes to divest the maritime activity of Bolloré Logistics Polynesia as well as the activities of Bolloré Logistics France relating to French Polynesia. 

“The sale of this activity will make it possible to effectively and proportionately remedy the competition issues identified,” the authority writes in its statement.

They will be selling the customer list of the business. The agreement provides two limited exceptions allowing CMA CGM to offer services for organizing maritime transport of goods to a limited number of multi-destination customers of Bolloré Logistics.

The Polynesia Competition Authority notes that it notified other authorities including New Caledonia and the European Commission of its examination and cooperated with those authorities. CMA CGM is still waiting for approval from the European Union to close the acquisition, which is the largest in the history of the company.