Mexican Government Investigating Claims of Wal-Mart Monopoly

Mexico’s anti-trust watchdog said on May 29 that it had launched an investigation into anti-competitive practices in the country’s retail sector, apparently based on complaints filed against powerhouse Wal-Mart de Mexico (Walmex), the Mexican division of Bentonville-based Wal-Mart Stores Inc.

The Federal Competition Commission (CFC) announced in the official Daily Gazette it is looking into alleged monopolistic practices, such as contracts that unfairly displace competitors and certain pricing conditions with suppliers.

Distributors filed a complaint against Walmex,accusing Mexico’s leading retailer of threatening to hold back purchases unless it received certain price conditions, according to a report from the Reuters news agency.

Walmex said it would cooperate with the CFC investigation.

“We are the first to want this to be cleared up,” spokeswoman Mercedes Aragones said after reports of the investigation surfaced.

Walmex has increased its market share with aggressive expansion, advertising and promotions, including an “Every Day Low Prices” campaign that consistently undercuts competitors’ prices.

Walmex’s centralized distribution system and negotiating power with suppliers are key to its ability to offer consumers low prices, helping it to buck the past year’s economic recession, company executives and analysts said.

• Seiyu Ltd. and Wal-Mart said they will finish their feasibility study on their alliance by the end of this year, according to a Dow Jones Newswires report.

The “feasibility study will determine” details of the two companies’ alliance and strategies, including store branding, Wal-Mart International’s president John Menzer told a news conference after Seiyu’s regular shareholders’ meeting in May.

Shareholders of Seiyu have approved the tie-up between the two companies and Sumitomo Corp. as announced in March. The approval officially allows Wal-Mart to exercise the right to buy up to a 66.7 percent stake in the Tokyo-based supermarket store operator.

“We have found nothing that will stop us from exercising the option,” Menzer said.

Seiyu’s president Masao Kiuchi told the same news conference his company is still undecided on how to use the funds to be injected by Wal-Mart through the share sale.

After the feasibility study is completed, the pair will put together a five-year business plan as the next step for their cooperation, Menzer said.

In the future, Wal-Mart may market products purchased from Seiyu’s suppliers at its stores in other countries, he added.

• A heat wave that swept across the United States in the last week of May sent consumers scurrying to many of the country’s 3,256 stores owned by Bentonville-based Wal-Mart to stock up on everything from food to garden supplies.

Sales were not so stellar during the first three weeks of May due to unseasonably cool weather.

“The seasonal business didn’t really come on until late in the month,” said Tom William’s, a Wal-Mart spokesman. “We saw some acceleration in the last week of the month.”

Wal-Mart said the company’s same-store sales increased by 6.2 percent in May, beating Wall Street’s consensus estimate of a 5.3 percent gain.

In a press release issued June 5, the world’s largest retailer said same-store sales growth reached 6.8 percent for its Wal-Mart stores division and 3.7 percent for its Sam’s Club division in the four-week period ended May 31.

Total sales for the month increased by 11.5 percent to $18.34 billion from $16.44 billion in the same period the previous year. Total sales for the Wal-Mart division jumped by 13.6 percent to $11.79 billion from $10.39 billion last year. Sam’s Club sales rose 9.8 percent to $2.45 billion for the month from $2.23 billion in the similar period a year ago. Sales for the international division increased by 9 percent from $2.75 billion to $2.99 billion.

Analysts had expected disappointing May sales figures from most retailers because of the unseasonably cool temperatures that put a damper on consumers who might otherwise have been buying spring and summer fashions.

Wal-Mart announced the May sales a day earlier than expected because many of its employees would be traveling the next day to attend the annual shareholders meeting scheduled for June 7 in Fayetteville.

As of May 31, the company had 1,614 Wal-Mart stores, 1,133 Supercenters, 509 Sam’s Clubs and 33 Neighborhood Markets in the United States. Internationally, the company operated units in Argentina (11), Brazil (22), Canada (196), China (19), Germany (95), Korea (12), Mexico (570), Puerto Rico (17) and the United Kingdom (254).

Wal-Mart also owns a 6.1 percent interest in The Seiyu, Ltd. with options to purchase up to 66.7 percent of that company. Seiyu operates over 400 stores located throughout Japan. Mexico’s anti-trust watchdog said on May 29 that it had launched an investigation into anti-competitive practices in the country’s retail sector, apparently based on complaints filed against powerhouse Wal-Mart de Mexico (Walmex), the Mexican division of Bentonville-based Wal-Mart Stores Inc.

The Federal Competition Commission (CFC) announced in the official Daily Gazette it is looking into alleged monopolistic practices, such as contracts that unfairly displace competitors and certain pricing conditions with suppliers.

Distributors filed a complaint against Walmex,accusing Mexico’s leading retailer of threatening to hold back purchases unless it received certain price conditions, according to a report from the Reuters news agency.

Walmex said it would cooperate with the CFC investigation.

“We are the first to want this to be cleared up,” spokeswoman Mercedes Aragones said after reports of the investigation surfaced.

Walmex has increased its market share with aggressive expansion, advertising and promotions, including an “Every Day Low Prices” campaign that consistently undercuts competitors’ prices.

Walmex’s centralized distribution system and negotiating power with suppliers are key to its ability to offer consumers low prices, helping it to buck the past year’s economic recession, company executives and analysts said.

• Seiyu Ltd. and Wal-Mart said they will finish their feasibility study on their alliance by the end of this year, according to a Dow Jones Newswires report.

The “feasibility study will determine” details of the two companies’ alliance and strategies, including store branding, Wal-Mart International’s president John Menzer told a news conference after Seiyu’s regular shareholders’ meeting in May.

Shareholders of Seiyu have approved the tie-up between the two companies and Sumitomo Corp. as announced in March. The approval officially allows Wal-Mart to exercise the right to buy up to a 66.7 percent stake in the Tokyo-based supermarket store operator.

“We have found nothing that will stop us from exercising the option,” Menzer said.

Seiyu’s president Masao Kiuchi told the same news conference his company is still undecided on how to use the funds to be injected by Wal-Mart through the share sale.

After the feasibility study is completed, the pair will put together a five-year business plan as the next step for their cooperation, Menzer said.

In the future, Wal-Mart may market products purchased from Seiyu’s suppliers at its stores in other countries, he added.

• A heat wave that swept across the United States in the last week of May sent consumers scurrying to many of the country’s 3,256 stores owned by Bentonville-based Wal-Mart to stock up on everything from food to garden supplies.

Sales were not so stellar during the first three weeks of May due to unseasonably cool weather.

“The seasonal business didn’t really come on until late in the month,” said Tom William’s, a Wal-Mart spokesman. “We saw some acceleration in the last week of the month.”

Wal-Mart said the company’s same-store sales increased by 6.2 percent in May, beating Wall Street’s consensus estimate of a 5.3 percent gain.

In a press release issued June 5, the world’s largest retailer said same-store sales growth reached 6.8 percent for its Wal-Mart stores division and 3.7 percent for its Sam’s Club division in the four-week period ended May 31.

Total sales for the month increased by 11.5 percent to $18.34 billion from $16.44 billion in the same period the previous year. Total sales for the Wal-Mart division jumped by 13.6 percent to $11.79 billion from $10.39 billion last year. Sam’s Club sales rose 9.8 percent to $2.45 billion for the month from $2.23 billion in the similar period a year ago. Sales for the international division increased by 9 percent from $2.75 billion to $2.99 billion.

Analysts had expected disappointing May sales figures from most retailers because of the unseasonably cool temperatures that put a damper on consumers who might otherwise have been buying spring and summer fashions.

Wal-Mart announced the May sales a day earlier than expected because many of its employees would be traveling the next day to attend the annual shareholders meeting scheduled for June 7 in Fayetteville.

As of May 31, the company had 1,614 Wal-Mart stores, 1,133 Supercenters, 509 Sam’s Clubs and 33 Neighborhood Markets in the United States. Internationally, the company operated units in Argentina (11), Brazil (22), Canada (196), China (19), Germany (95), Korea (12), Mexico (570), Puerto Rico (17) and the United Kingdom (254).

Wal-Mart also owns a 6.1 percent interest in The Seiyu, Ltd. with options to purchase up to 66.7 percent of that company. Seiyu operates over 400 stores located throughout Japan.