The proposed $5 billion purchase of Bolloré Logistics by CMA CGM has drawn opposition from French Polynesian authorities. To alleviate concerns of control over the European-French Polynesia freight and logistics market, an agreement has been struck with the authorities.

CMA CGM Group, on the brink of finalizing the Bolloré Logistics take-over, claims the deal will bolster its freight management scale and reach. The deal, if finalized, would propel CMA CGM amongst the top five global logistics companies.

The Polynesian Competition Authority reviewed the application for this market concentration under the Polynesia Competition Code in October 2023. Although the company’s CEVA Logistics is only marginally active in French Polynesia and Bollore Logistics is inactive in the logistics sector here, the authorities expressed concern over potential monopolization of transport services and potential price hikes.

Upon closer inspection, the authority deduced that the merger could result in restricted access to transport services and create a ‘quasi-monopoly’ for CMA CGM. They concluded that this could be detrimental to competition.

To quell these concerns, the authority and the companies have agreed to a settlement that includes selling the maritime business of Bolloré Logistics Polynesia and the related activities of Bolloré Logistics France.

They argue, the divesture will serve as an effective remedy to the identified competition issues. The deal includes exceptions allowing CMA CGM to offer transport services to a limited number of Bolloré Logistics’ multi-destination customers.

The authorities have kept other organizations, including New Caledonia and the European Commission, informed of the developments. CMA CGM is now waiting for approval from the European Union to conclude the largest acquisition in its history.

Analyzing the potential impact of the CMA CGM’s acquisition of Bolloré Logistics, it becomes evident that the move could significantly restructure the Pacific Islands container shipping and logistics landscape, particularly in the regions under scrutiny. Firstly, by divesting Bolloré Logistics’ maritime business in Polynesia, CMA CGM could mitigate monopoly fears, thereby maintaining a competitive market environment. This strategic divestiture not only appeases regulatory bodies but also safeguards against the rise in transport service prices that often accompanies reduced competition. However, the acquisition’s broader implications warrant attention. CMA CGM’s ascent into the top tiers of global logistics companies could enhance operational efficiencies and customer service through expanded global reach and increased freight management capabilities. Nevertheless, there remains a concern about the long-term consequences for smaller, regional logistics providers who may find it difficult to compete with a behemoth like CMA CGM, potentially leading to reduced options for consumers. Furthermore, while the deal promises to address competition issues through the divestiture agreement, the specifics of these arrangements and their enforcement will play a critical role in maintaining a balanced competitive landscape.