Bundeskartellamt examines supply structures in the furniture sector

The Bundeskartellamt has initiated administrative proceedings against Germany’s largest furniture purchasing cooperation, VME Union GmbH. The Krieger Group intends to join the cooperation effective from 1 January 2019.

Andreas Mundt, President of the Bundeskartellamt: “Most furniture retailers in Germany have joined purchasing cooperations. Such cooperations are not generally prohibited under competition law. Particularly smaller furniture retailers can potentially benefit from improved purchasing conditions and thus compete with chains and the “big players” in the market. However, we need to make sure that their buying power does not increase to an extent that raises concerns with regard to the manufacturing landscape as a whole, which is mostly characterised by small and medium-sized manufacturers. Consumers can of course benefit from conditions that are more favourable for retailers, provided that they pass them on to their customers. However, if manufacturers are unable to compete in the long run because they cannot cope with the pressure raised by the retailers’ conditions and disappear from the market as a result, there will be less variety on the market and prices will increase, putting consumers at a disadvantage.”

The Bundeskartellamt has been monitoring the increasing concentration of purchasing cooperations for some time. The purpose of the proceedings is to review whether VME Union raises competition law concerns, both in its current form and after Möbel Krieger has carried out its plans to join the cooperation.

Among the retailers which are already part of the VME Union purchasing cooperation are Möbel Roller, Möbel Rieger and Möbel Hardeck. Additionally, VME Union cooperates with another purchasing cooperation, MHK Group, in the area of kitchen furniture. Other major furniture purchasing cooperations in Germany are Giga (XXXLutz), Begros, EMV, Der Kreis and Alliance. In Germany, only a few furniture retailers procure their furniture independently, e.g. Dänisches Bettenlager or Segmüller. IKEA, which is the market leader in furniture retailing, is vertically integrated and thus not a sales alternative for German manufacturers.

European competition law provisions generally consider purchasing cooperations unproblematic, provided that they do not exceed a certain size, with a market share of 15% being used as a reference value. Cooperations with higher market shares can be exempt from prohibition subject to certain conditions. When examining cooperations, a large number of factors are considered, e.g. the actual purchasing procedure and the degree of freedom retailers which joined the cooperation actually have when effecting procurements. Another factor to consider is the purchasing cooperation’s activity when it comes to selling to end customers, e.g. under a private label. The Bundeskartellamt will assess the investigation’s results and determine whether the structure of VME Union raises competition law concerns and whether the cooperation needs to make adjustments.