German supermarkets

Edeka Gets Surprise Takeover Boost

Tengelmann-Edeka-DPA
Edeka and Kaiser's Tengelmann have been battling for months to get their merger approved.
  • Why it matters

    Why it matters

    The economics ministry’s intervention – overruling the country’s monopoly commission and cartel office – could have major consequences for businesses in Germany.

  • Facts

    Facts

    • Edeka has been in months’ long negotiations to buy its struggling rival but has been thwarted by competition authorities.
    • Edeka is the industry market leader in Germany with a share of around 20 percent, well ahead of the number two, Rewe.
    • Kaiser’s Tengelmann is the country’s 7th-largest grocery chain, but is dominant in some key regions of the country.
  • Audio

    Audio

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After more than a year of wrangling, it seems Edeka, Germany’s largest supermarket chain, will finally get its hands on the prize. But it took a controversial overrule by the country’s economics minister – one with potentially far-reaching consequences – to do it.

Edeka has won the approval of Sigmar Gabriel’s ministry to buy rival chain Kaiser’s Tengelmann, but subject to certain conditions that the supermarket giant may not be too happy with.

In a statement on Tuesday, Mr. Gabriel set tough conditions that Edeka will have to agree to before the sale can go ahead. Effectively, it guarantees that nearly all of the more than 16,000 employees of the Kaiser’s Tengelmann stores will keep their jobs for at least five years.

Edeka and Tengelmann have 14 days to agree to the economics ministry’s demands. Only then will Mr. Gabriel give his final approval. Edeka, in a statement, signaled it would bite its lip and take the deal.

“This is a good day for the employees of Kaiser’s Tengelmann, who now have new perspective for a secure future under the roof of the Edeka brand,” the company said in a statement to the German news agency dpa.

If final approval is given, as expected, it would mark a surprising reversal in Edeka’s long-running battle with competition authorities to acquire its smaller rival.

Mr. Gabriel’s approval runs against a decision from Germany’s anti-trust authorities. The Federal Cartel Office last April forbade Edeka from buying Kaiser’s Tengelmann out of fear that it would create a supermarket monopoly in parts of the country. The separate Monopolies Commission, which advises the government, said in August that the economics ministry had no grounds to overrule the decision.

Germany’s opposition Green party sharply criticized Tuesday’s ruling, telling Handelsblatt that the decision would enhance Edeka’s dominance of the German market.

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