Is this the end of the battle for Kaiser's Tengelmann?
Gabriel wants to ensure through additional conditions attached to the merger that jobs and previous collective agreements are maintained at Tengelmann. “Only if these conditions are met will the purchase of Kaiser's Tengelmann by Edeka continue,” emphasizes Gabriel. The currently proposed guarantees by Edeka, in the form of voluntary agreements and only for employees in two regions, is rightly regarded by the Minister as uncertain and inadequate. Edeka and Tengelmann have 14 days to comment after receiving the new conditions.
Federal Minister Gabriel demands clear additional conditions for the merger
The Federal Cartel Office previously prohibited the takeover of Kaiser's Tengelmann by the Edeka Group for competitive reasons. Tengelmann has a total of 451 supermarkets and about 16,000 employees. After the prohibition by the Cartel Office both supermarket chains made an application for ministerial approval from the Federal Minister for Economic Affairs. The minister can veto the decision of the Cartel Office, which he did.
Controversial merger
The trade union Verdi, amongst others, warned against this merger. This decision is likely to disappoint the competing supermarket giant Rewe. Rewe also wanted to buy the Kaiser's Tengelmann supermarkets, but their offer was never seriously considered by the management.
The German Farmers' Association (DBV) doesn’t agree with this decision either. “The German farmers can’t comprehend the decision of the minister to allow the sales of Kaiser’s Tengelmann to EDEKA,” states Joachim Rukwied, “Even the additional conditions can’t take away that a questionable concentration of power is created in the food retail sector.”
Power of the market continues to grow
The exact consequences for the industry and consumers are still unclear. However, it is clear that the trend of companies is getting bigger and the increasing power of individual corporations continues. There are five major players at the German market:
1 Edeka-group (including Netto): 47 billion Euro
2 Schwarz-group (Lidl, Kaufland): 27.7 billion Euro (estimated)
3 Rewe-group (including Penny): 27.6 billion Euro (estimated)
4 Aldi-group: 22.6 billion Euro (estimated)
5 Metro-group (Real, Metro): 10.8 billion Euro (estimated)
Source: dpa
Andreas Mundt, director of the Federal Cartel Office, had justified his decision by stating that the merger would lead to a significant deterioration in competition in a already highly concentrated regional market such as in North Rhine-Westphalia. It is clear that the power of the Edeka group continues to grow by this merger.