French caterers rise as competition watchdog discourages fee caps

Elior SA

17/10/2023 09:34

(Updates shares in 2nd bullet, adds analyst comment in bullets
4-7)
    ** Shares in French catering companies rise as a report from
the country's competition watchdog suggests fee caps might not
be the best approach in the sector
    ** Edenred  EDEN.PA  rises 4.6% and Elior  ELIOR.PA  is up
3.2%, sitting among best performers of SBF 120  .SBF120  index,
while Sodexo  EXHO.PA  gains 1.5%
    ** "While price caps can be a response to market failures,
they are not the most appropriate response in this case", said
the French Autorite de la Concurrence in a report
    ** Both Barclays and Alphavalue analysts point to the news
as overall positive for French vouchers providers
        ** Alphavalue analyst Yi Zhong says concerns about
Sodexo's 
    projected spin-off
     of its Benefits & Rewards Services unit, Pluxee, should be
considerably mitigated
  
        ** "Further or other regulatory pressure should not be
ruled out as the local market in France remains highly
concentrated, led by four major players, and regulations might
intend or seek to facilitate more competition", she adds
  
        ** Barclays sees the competition watchdog's proposal for
accelerated dematerialisation of paper vouchers as a positive
for large incumbents like Edenred as this provides market share
gain opportunity
  
    ** Caterers' shares dropped sharply early October following
a French minister's comments on the possible meal vouchers
commissions cap in France

 (Reporting by Federica Mileo in Gdansk)
 ((Federica.mileo@thomsonreuters.com))