Edeka Tengelmann deal

Watchdog Quits Amid Supermarket Takeover Row

kaisers
Kaiser's Tengelmann has been a pawn in the power battle between the government and monopoly commission.
  • Why it matters

    Why it matters

    The government has overruled the monopoly commission, worrying opposition parties.

  • Facts

    Facts

    • Edeka, Germany’s largest supermarket company, has been given final approval to takeover rival Kaiser’s Tengelmann.
    • The decision overruled advice from the monopoly commission, leading to chief Daniel Zimmer resigning.
    • Rewe, another leading supermarket chain,has also launched a legal appeal against the takeover.
  • Audio

    Audio

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Germany’s monopoly commissioner quit in protest yesterday after economics minister Sigmar Gabriel approved the controversial takeover of superamarket chain Kaiser’s Tengelmann by rival Edeka.

Daniel Zimmer, whose agency had opposed the deal on competition grounds, said he was resigning to make a point.

“By stepping down I want to show that I do not agree with Gabriel’s decision,” Mr. Zimmer told Handelsblatt. “The detrimental impact of the fusion on competition will not be offset by benefits to the public welfare.”

Regulators had worried that the merger of two large supermarkets would stifle competition, but Mr. Gabriel said the deal could go through, on the proviso that jobs are not lost.

Last year, Germany’s federal cartel office froze the deal between the two chains, saying it would hamper competition in big cities such as Berlin and Munich and could fuel rising prices. Edeka is Germany’s biggest grocer, with a 24 percent share of the market. Kaiser’s Tengelmann has only a 1.1 percent share, but dominates in some affluent urban pockets.

Mr. Zimmer worked for the monopoly commission for seven years, three of which he served as its boss. He told Handelsblatt that his exit was “no spontaneous decision. I had a few weeks to think about it as the minister had revealed his preference to allow the deal some weeks ago.”

In August 2015, the monopoly commission wrote a lengthy report advising the minister against allowing the supermarket deal.

On Thursday, Mr. Gabriel attached some tough conditions to his approval, forcing Edeka to maintain 16,000 Kaisers’ Tengelmann workers for at least five years, to make wage agreements with the unions and preserve existing organizational structures.

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