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Germany approves Edeka, Kaiser’s supermarkets merger


According to reports from ruling coalition, the German government has approved plans by the country’s biggest supermarket group Edeka to buy grocery chain Kaiser’s, owned by retail group Tengelmann. German Finance Minister Sigmar Gabriel was reported as making a special permanent permit to help the merger of the supermarket chains Edeka and Kaiser’s Tengelmann. Two people familiar with the issue told Reuters  that the permit will be announced today. The minister had previously invited to a statement on the subject. With a ministerial authorization, he can make the merger prohibition by the Federal Cartel lapsed because of an impending impairment of competition in the highly competitive market of retail chains.

The Finance Minister Sigmar Gabriel (SPD) involved into the merger of retail chains  after the Cartel prohibited the takeover of market leader Edeka in November. The Competition Authority feared the merger could result in increase in prices with little or no competition. The food trade industry in Germany is highly concentrated already. Only four chains – Edeka, Rewe, the Schwarz group with the discounters Lidl and Aldi – share 85 percent of the market.
And among the ‘big four’ Edeka is by far the number one.

Only a veto by the Minister of Finance may lift the ban. And that now seems to be happening. By law, the Federal Minister may grant an exemption if the overall economic benefits of the merger outweigh the anti-competitive concerns.  Gabriel had formulated once more stringent rules for a special permit in February. He wants to lash that Edeka in the acquisition of competitors in the foreseeable future pronounce no compulsory redundancies.

The retailers justify their fusion so that only the total takeover by Edeka secure the preservation of the 16 000 jobs at Kaiser’s Tengelmann. A single settlement will hand cost at least 8,000 jobs.

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