Press Statement from Rebalance Now, Oxfam Germany, and Forum Fairer Handel
The Federal Cartel Office today approved Edeka’s acquisition of 178 Tegut stores, subject to certain conditions. Edeka has agreed not to acquire 24 additional stores over the next four years. In an initial, preliminary assessment, the Federal Cartel Office had raised competition concerns regarding 38 stores. The Forum Fairer Handel, Oxfam Germany, and Rebalance Now comment:
“The approval of the Tegut-Edeka takeover is problematic. Four supermarket chains control over 90 percent of the market and are increasingly pushing out smaller competitors. The fact that Edeka is now allowed to acquire additional stores will further strengthen its position as the market leader,” comments Ulrich Müller, CEO of Rebalance Now. “While Edeka is allowed to acquire fewer Tegut locations than originally desired, this limits the damage somewhat but does not prevent Edeka from gaining more power. The conditions do not address the underlying problem of growing market concentration,” explains Steffen Vogel of Oxfam Germany.
“Edeka’s bargaining power with suppliers will continue to grow as a result of the acquisition. The increasing concentration in the food retail sector is dangerous for consumers, who can expect higher prices and less variety, and for the agricultural sector and small-to-medium-sized manufacturers, who are struggling under pressure from retailers to lower prices. The fact that the Federal Cartel Office sees no problems in the procurement markets reveals gaps in merger control,” criticizes Mattias Fiedler, executive director of Forum Fairer Handel.
The Federal Cartel Office points out that Edeka’s growth is minimal. However, suppliers to the German food retail sector are already reporting abuses of market power in contract negotiations. Steffen Vogel comments: “Even a small increase in Edeka’s procurement volume must be viewed negatively given the already significant bargaining power of the four major suppliers and should justify a complete ban.”
The concerns of employees at the affected stores must be taken seriously. However, increasing market concentration will lead to fewer jobs in the long run. “Migros should find another buyer for the stores outside of the big four supermarket chains,” demands Matthias Fiedler.
Ulrich Müller adds: “We need more diversity and competition in the food retail sector. To achieve this, we now need a sector inquiry with far-reaching remedial measures—including the break up of dominant conglomerates.”
Further information:
- Our statement to the Federal Cartel Office regarding the tegut acquisition
- Our study “Market Power and Its Consequences” on market concentration in food supply chains
Photo: Matheus Cenali, unsplash
