Agricultural trade: RaiWa Kassel can acquire 19 locations of RWZ Cologne – Bundeskartellamt allows merger only after changes to merger plans

The Bundeskartellamt has today cleared the acquisition of 19 locations of the agricultural cooperative Raiffeisen Waren-Zentrale Rhein-Main eG (RWZ), Cologne, by Raiffeisen Waren GmbH (RaiWa), Kassel. The companies had amended their original plans before the clearance because of the Bundeskartellamt's competition concerns.

The launch of a joint venture, Raiffeisen AgriTrading Rhein-Main GmbH & Co. KG, to market agricultural products (grain and oil seeds) at wholesale level, was also cleared.

RaiWa supplies agricultural products and services and operates 62 locations, mainly in Hesse, Thuringia and Saxony. In 2019 the company achieved a turnover of approx. 1.6 billion euros. RWZ describes itself as Germany’s third largest central cooperative in the agricultural sales sector and operates approx. 150 locations in large parts of North Rhine-Westphalia, Hesse, Thuringia, Saxony, Rhineland-Palatinate and Saarland. In 2019 it achieved a turnover of approx. 2.2 billion euros.

The main customers of the two companies are farmers. The merger mainly affects the various regional markets for the purchase of grain and oil seeds and sale of seeds, plant protection products and fertilisers.

Andreas Mundt, President of the Bundeskartellamt: “The companies had originally planned to cooperate more closely with one another in future and to operate several joint ventures. However, our enquiries among competitors and farmers have clearly shown that these joint ventures would have significantly impeded competition in the agricultural markets, above all in Hesse. The companies ultimately amended their plans and were able to eliminate our competition concerns.”

In July 2020 RWZ and RaiWa had originally notified the Bundeskartellamt of their intention to launch three joint ventures. However, they withdrew their notification in late August 2020 because the joint control was incompatible with the main principle of a registered cooperative to support its members. A modified project was then notified where RWZ and RaiWa were to solely control the joint ventures alternately. After the Bundeskartellamt had initiated in-depth second phase proceedings and expressed its competition concerns, RWZ and RaiWa withdrew their notification in late December 2020 and again restructured their cooperation project.

The new notification of 6 April 2021 involves the acquisition by RaiWa of 19 RWZ locations in Hesse, Thuringia and Saxony and the launch of a joint venture (Raiffeisen Agri-Trading Rhein-Main GmbH & Co. KG) as well as the conclusion of an agreement on the joint sale of agricultural products (grain and oil seeds) at wholesale level and a purchasing agreement.

The regions in which the activities of the companies overlap are in particular located in Hesse and Thuringia. There are no competition concerns about the overlaps in Thuringia. In spite of RaiWa’s high market shares in some fertiliser markets, it has strong competitors and the farmers are quite prepared to switch supplier depending on the supply situation. There is also competitive pressure from organic fertilisers.

However, following its investigations the Bundeskartellamt had considerable competition concerns about the grain purchasing markets and the markets for trade in seeds, plant protection products and fertilisers in Hesse, especially in the Vogelsberg and Hanau regions. RaiWa’s high market share lead over its competitors, its sole position in waterborne shipment at Hanau port and other factors would have created a very strong position for RaiWa post merger.

The parties offered to implement specific measures to eliminate the Bundeskartellamt’s competition concerns. One of these commitments involves the sale of RWZ’s share in Raiffeisen Vogelsberg GmbH and another the splitting of the location at Hanau port between RWZ and RaiWa. The two individual parts of this location are to be operated independently of one another. These commitments were already implemented before the project was renotified.

The sale of RWZ’s share in Raiffeisen Vogelsberg GmbH will result in future in the entry of a further competitor in the central Hesse region. This will have a largely positive effect on competition due to the favourable position of the locations and Raiffeisen Vogelsberg GmbH’s wide supply radii. The division of the location at Hanau part will offer farmers the possibility in future to choose between two different purchasers at the port and eliminates RaiWa’s sole position in waterborne transhipment.

With regard to the grain and oil seeds wholesale markets affected, the launch of the joint venture for the joint sale of RWZ’s and RaiWA’s agricultural products does not raise any competition concerns under merger control rules because the parties’ joint market shares are low and the project even has positive effects on competition. The Bundeskartellamt has provided the companies with advice on how to ensure that the joint venture conforms with competition law, which the parties have now put into practice. In addition the authority also pointed out that in implementing the cooperation the parties must not violate the general prohibition of anti-competitive agreements under Section 1 German Competition Act (GWB).