Grocery Merger

Failing the Smell Test

Edeka Tengelmann dpa
A disagreeable union.
  • Why it matters

    Why it matters

    If Edeka is unable to buy the Kaiser’s supermarket chain from rival Tengelmann, the stores could be closed anyway, leading to a loss of jobs.

  • Facts

    Facts

    • Edeka, Germany’s largest supermarket chain, wants to buy the Kaiser’s stores from rival Tengelmann.
    • Tengelmann is threatening to close the Kaiser’s chain if regulators block the deal.
    • Another rival, Rewe, has offered to step in and buy Kaiser’s, but antitrust concerns remain.
  • Audio

    Audio

  • Pdf

Karl-Erivan Haub, chief executive of Tengelmann, wants to sell the grocer’s 451 Kaiser’s supermarkets. Markus Mosa, head of Germany’s largest supermarket operator, Edeka, would like to buy them.

Not so fast, says Germany’s Federal Cartel Office agency.

The Bonn-based competition watchdog expressed significant reservations about the deal in a draft decision delivered to the two companies on Tuesday.

In a letter accompanying the nearly 260-page document, the agency made clear it will forbid the takeover in its current form.

“According to investigations up to now, the plan would lead to a further concentration of already highly dense market structures, especially in Berlin, Munich and several larger cities in North Rhine-Westphalia,” explained Andreas Mundt, the agency’s president.

The deal would also increase the purchasing power of the top echelon of Germany’s supermarkets, hitting their competitors, he added. Many producers of grocery items would also lose an important alternative outlet.

Edeka and Tengelmann have until February 26 to persuade the regulator to reconsider. Only wide-ranging concessions will save the deal. The Cartel Office’s final decision on the proposed deal is scheduled for March 6.

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