Handelsblatt Exclusive

New Cartel Chief: Blocking Edeka Deal Was Right

ARCHIV - Der neue Chef des Zentrums für Europäische Wirtschaftsforschung (ZEW), Achim Wambach, gestikuliert am 10.03.2016 in Mannheim (Baden-Württemberg) bei einer Pressekonferenz im Institut. Wambach, hat seinem Vorgänger im Streit um die Übernahme der Supermarktkette Kaiser's Tengelmann durch Edeka den Rücken gestärkt. Wambach erneuerte die Kritik an der Ministererlaubnis für den Deal durch Bundeswirtschaftsminister Sigmar Gabriel (SPD). Foto: Uwe Anspach/dpa +++(c) dpa - Bildfunk+++
Achim Wambach, Germany's new antitrust chief, said his predecessor was right to block Edeka's takeover of supermarket rival Kaiser's Tengelmann.
  • Why it matters

    Why it matters

    The new head of Germany’s monopoly commission is likely to continue the aggressive antitrust stances of his predecessor, who resigned after Germany’s vice chancellor used his authority to approve a major supermarket merger.

  • Facts

    Facts

    • Daniel Zimmer, the former head of the Monopoly Commission, resigned after Mr. Gabriel used his authority to approve Edeka’s merger with Kaiser’s Tenglemann.
    • Achim Wambach, his successor at the commission, also voted against the merger.
    • Competitor Rewe has filed a suit to halt Edeka’s merger with Kaiser’s Tengelmann.
  • Audio

    Audio

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Achim Wambach took charge of Germany’s Monopolies Commission is tumultuous circumstances. His old boss, Daniel Zimmer quit after economics minister Sigmar Gabriel overturned the anti trust regulators ruling and decided to approve supermarket giant Edeka’s takeover of its main rival Kaiser’s Tengelmann last year.

In an interview with Handelsblatt, Mr. Wambach, who has been a member of the monopolies commission since 2014, said he had voted with Mr. Zimmer against the deal, believing that the

the merger would reduce competition among Germany’s supermarket chains.

“The Monopolies Commission unanimously approved the statement last fall in which we argued against the merger – with my vote as well,” Mr. Wambach told Handelsblatt in an interview.

The commission’s recommendation came after a separate body, the Federal Cartel Office, had already ruled against the merger.

Economics Minister Sigmar Gabriel, however, had different ideas. He rejected the commission’s recommendation and approved the takeover, imposing strict conditions to prevent layoffs. Mr. Zimmer resigned in protest and Mr. Wambach has now taken his place as chairman of the commission.

 

ARCHIV - ILLUSTRATION - Ein Mann geht am 09.09.2015 in Köln (Nordrhein-Westfalen) mit jeweils einer Tragetasche der Supermarktketten Kaisers's Tengelmann und Edeka über die Straße. Foto: Oliver Berg/dpa (zu dpa «Entscheidung zu Fusion von Edeka und Tengelmann - Gabriel-Erklärung» vom 17.03.2016) +++(c) dpa - Bildfunk+++
Edeka’s takeover of supermarket rival Kaiser’s Tengelmann in Germany prompted the country’s anti-cartel chief to resign after Germany’s vice chancellor Sigmar Gabriel intervened to approve the deal. Source: DPA

 

Edeka is already the largest supermarket chain in Germany, and through the acquisition of Kaiser’s it will increase its market share in cities such as Berlin and Munich.

“As a general rule, it’s best for the labor market when competition is preserved as much as possible,” Mr. Wambach said. “But that’s not the case if Edeka takes over these markets. Jobs could be cut in other places – at Edeka, at competitors or at the manufacturers.”

“As a general rule, it's best for the labor market when competition is preserved as much as possible”

Achim Wambach, Monopoly Commission chairman

Despite the clash, Mr. Wambach still believes the commission can still work with the government. “He consulted intensively with us,” Mr. Wambach said of Mr. Gabriel. “The simple fact of the matter is that we give recommendations and the minister can do something other than what we recommend.”

But the saga may lead to fundamental changes that may prevent the government begin able to overrule regulators in the future. When Mr. Gabriel approved Edeka’s takeover of Kaiser’s, he made use of a controversial authority that allows his ministry to intervene and overrule Germany’s anti-trust authorities.

The center-right Christian Democrats, who govern in a coalition with Mr. Gabriel’s center-left Social Democrats, were dismayed by the decision and have called for the ministry’s authority to be curtailed in the future.

“We need to be more specific about how cases are evaluated, especially when there is high market concentration,” Matthias Heider, an expert on anti-trust law with the Christian Democrats’ parliamentary group, told Handelsblatt. “Even in the case of a ministerial approval, the effects on competition need to be taken into account.”

 

Edeka Kaiser Aldi Schwarz Metro Lidl Kaufland Rossmann DM Lekkerland Rewe Tengelmann Group-01

 

Under current law, parliament isn’t currently entitled to information when the economics minister decides to overrule anti-trust authorities. The Green party, who are not natural allies of the Christian Democrats, found common cause over this particular issue.

“The ministerial approval in its current form is a back-room decision,” Katharina Dröge, a spokeswoman for the Greens, told Handelsblatt. “At the moment, a single person has the ability to make such a far-reaching decision with no public involvement whatsoever. This makes the decision highly susceptible to lobbying pressure.”

Rewe, Edeka’s main competitor, isn’t waiting for the politicians to clip the ministry’s wings. The supermarket chain has taken matters into its own hands, filing a complaint against the merger in a Düsseldorf court last month. Rewe chief executive Alain Caparros hargues that competition would suffer.

“It’s a bad decision for the employees of Kaiser’s Tengelmann and at the same time for the consumers, the small and mid-sized suppliers, the agriculture industry as well as for fair and healthy competition in the entire German grocery market,” Mr. Caparros said of the merger.

 

Germanys Biggest Supermarket Chains-01 edeka kaiser

 

It’s unclear where the court stands. If the judges rule in Rewe’s favor, the merger will be halted and the anti trust regulators will be vindicated.

“I’m very eager to hear the result,” Mr. Wambach said. “There were only a few court cases about the minister’s authority here. The law doesn’t really say how much wiggle room he has.”

 

Hans Christian Müller-Dröge is an editor for Handelsblatt, covering economics and monetary policy. To contact: h.mueller@handelsblatt.com

 

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