Bundeskartellamt has concerns about Edeka’s acquisition of Real stores – negotiations on commitments

The Bundeskartellamt is currently examining plans by the Edeka group to acquire up to 72 Real stores from SCP Retail S.àr.l. Based on its preliminary assessment, the authority has competition concerns regarding 28 of these stores. The Bundeskartellamt has today informed Edeka and SCP of its preliminary assessment and is now holding talks with the companies on possible commitments to solve the competition issues. In order to dispel the competition concerns on the procurement side, SCP is offering to sell some of the Real stores to medium-sized food retailers.

In merger control proceedings in the food retail sector the Bundeskartellamt always has to assess the competition effects of a planned merger for both consumers (sales side) and food manufacturers and suppliers (procurement side) as well as for competing retailers.

On the sales side the authority is analysing the competitive conditions in the sale of food to consumers in the actual regional catchment areas of the 72 Real stores relevant in this case. Having carried out a preliminary assessment and a thorough analysis of the acquisition project, the Bundeskartellamt believes that there is a risk of a significant impediment to effective competition in the regional sales markets of 28 of these stores resulting from the acquisition of the Real stores in these areas by the Edeka group.

On the procurement side the Bundeskartellamt has analysed the purchase of food by retailers from food manufacturers and suppliers. Based on its preliminary assessment the Bundeskartellamt also has competition concerns about the acquisition project with regard to the vertical relationship to suppliers and the horizontal relationship to competitors in the food retail sector. Of particular significance here is the position of medium-sized retailers and their participation in the sale of the Real stores.

With the entry into force of the 10th Amendment to the German Competition Act (GWB) on 19 January 2021, the statutory deadline for second phase proceedings in merger control has been changed from previously four months to five months. As a consequence, the deadline for a final decision (previously 22 February 2021) has been extended to 22 March 2021.

The Edeka group is the leading supplier in the German food retail sector with a turnover of €55.7 billion (2019). In addition to Edeka Zentrale, the Edeka group also includes the discounter Netto Marken-Discount, seven regional companies with stores operated by Edeka managers as well as independent retailers belonging to the nine regional Edeka cooperatives. SCP, which is controlled by the Russian investment company Sistema, acquired all the Real stores from Metro, an acquisition which was cleared by the European Commission.

The Bundeskartellamt has already decided on Kaufland’s and Globus’s plans to also acquire Real stores (see press release of 22 December 2020)