Statement of objections issued against EDEKA for use of "wedding rebates" after Plus takeover
Bundeskartellamt considers demands on suppliers as abusive

According to the Bundeskartellamt's preliminary assessment, EDEKA Zentrale AG & Co.KG, Hamburg, has violated the so-called "Anzapfverbot" which prohibits a retailer from inducing its suppliers to grant it certain benefits without any objective justification. The prohibition applies to retailers which are dominant buyers on the market or (as in the present case) on which the suppliers are at least dependent for the sale of their goods.

Andreas Mundt, President of the Bundeskartellamt: "After its takeover of the Plus stores in 2009, EDEKA demanded so-called "wedding rebates" from dependent suppliers. We are currently assuming that this constituted an abusive practise insofar as EDEKA demanded benefits from its suppliers without an objective justification. Tough negotiations between retailers and producers are normal in the food retail sector and, despite the strong market position of the few large retailers, generally not objectionable under competition law. According to our preliminary assessment, however, in the present case EDEKA has crossed a line and abused its buyer power vis-à-vis its suppliers. In part, the demands were made with retroactive effect and without granting any corresponding compensation in return. A powerful company has to treat its economically dependent suppliers in a fairer manner."

In the past years, the German food retail market has undergone a strong concentration process. The four main retail groups, namely the Rewe Group, EDEKA, the Schwarz Group and Aldi, together hold a market share of around 85 per cent. For manufacturers of branded products, EDEKA is the strongest buyer for a wide range of their products. The buyer power of retailers is also the subject of a sector inquiry which the Bundeskartellamt is currently conducting.

The Bundeskartellamt had initiated the proceedings on account of information received in the course of its merger control proceedings concerning the takeover of the Plus stores and a complaint by the trademark association. In April 2009, it searched the headquarters of EDEKA. The authority is conducting an administrative proceeding to assess the legality of EDEKA's practices and where necessary prohibit them. The Bundeskartellamt's final decision in this matter will therefore be of fundamental importance for the sector and also offer guidance to other companies. The company is not facing a fine and has been given the opportunity to comment until 20 September 2013.

After its takeover of the Plus stores, EDEKA had demanded special conditions from about 500 suppliers in different product areas. EDEKA had demanded that better purchase conditions granted to the Plus markets also be offered to the EDEKA Group as a whole. The same applied to longer payment periods that had been granted to Plus in some cases. In addition, the suppliers were asked to pay certain amounts of money under the rubrics of "synergy bonus", "partnership compensation" or "bonus for product range expansion".

The Bundeskartellamt takes a particularly critical view of those demands that were not met with corresponding compensation by EDEKA:
• The "cherry picking" of individual preferential conditions granted to Plus by suppliers in the past.
• The application and extension of the preferential conditions granted to Plus to the entire range of products purchased by EDEKA from the respective supplier.
• The demand of special bonuses on account of cost and turnover benefits allegedly resulting from the Plus takeover for suppliers, without sufficient explanation or substantiation of such benefits.
• The fact that the demands were made retroactively.

Such demands have negative effects not only for the suppliers. A large company such as EDEKA can also use them to further expand its market power to the detriment of smaller retailers. Competition is also hindered by the fact that such demands induce suppliers to abstain from offering preferential conditions to smaller trading companies. This has been confirmed by the Bundeskartellamt's investigations. The suppliers fear that in the case of a future merger or purchase cooperation between retailers, they will be forced to offer such individual conditions to a significantly larger extent to the new partner as well.

The Bundeskartellamt has focused its investigations on the product market for sparkling wine as an exemplary case representing the many producers affected. For the case of the four largest producers of sparkling wine, it examined their dependency on EDEKA and the abusive demands of preferential conditions EDEKA made on them.

Legal background:
Section 19 (1) of the German Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB) prohibits the abusive exploitation of a dominant position. Under Section 19 (2) No. 5 GWB such an abuse of a dominant position exists if a company uses its market position to invite or cause other companies to grant it certain benefits without any objective justification. According to Section 20 (2) GWB this also applies to the relationship between companies if one company is dependent on the other.