Market impact is manageable: Cartel Office allows Rewe to take over 38 Tegut branches

The Migros group is withdrawing from the German market. His Tegut brand will disappear. However, numerous branches will continue to exist. The cartel office gives Edeka and the chain Aunt Enso the green light. Rewe is also allowed to take over markets, but not all of them that it wants.

The Federal Cartel Office has approved the takeover of 38 Tegut supermarkets by the retail giant Rewe. That is two fewer than Rewe intended. As the competition authorities announced, Rewe has committed not to acquire these two locations within a period of four years. “In this way, we prevent the competitive conditions for consumers in the affected regions from deteriorating significantly,” said Cartel Office chief Andreas Mundt. The two locations that Rewe is forgoing for the time being are in the Hessian cities of Marburg and Schlüchtern.

By taking over the 38 stores, Rewe will gain significantly less than 0.2 percent of the nationwide procurement volume, according to the cartel office. A significant hindrance to effective competition on the procurement markets is therefore not to be expected. The procurement market here refers to the food and other goods and services that Rewe purchases from suppliers.

The German food retail trade is dominated by the four major suppliers Rewe, Edeka, Aldi and Lidl/Kaufland - they account for more than 90 percent of sales in the German food retail trade. Manufacturers of food and other supermarket goods therefore have very few buyers, which means their negotiating position is rather weak. It is bad news for them that the independent customer Tegut is disappearing from the market.

Cartel Office: Competition is hardly getting worse

Competition watchdog Mundt speaks of a very high concentration in the food retail sector. The authorities' investigations also showed that there is competition between the large trading companies. The Tegut takeover will not change that. “The fact is: high concentration alone is not enough under antitrust law to prohibit a merger,” says Mundt. “The decisive factor is whether the specific takeover will significantly worsen competitive conditions.”

Edeka would like to incorporate most of the Tegut network of 300 locations; the cartel office recently approved the takeover of 178 branches by its competitor Rewe. These were also fewer than planned - Edeka committed to not taking over 24 branches within four years. In addition, the smart store chain Tante Enso is allowed to have 36 Tegut locations. What will happen to the remaining Tegut branches is still unclear.

Tegut was founded in Fulda in 1947 and has been part of the Migros Group since 2013. The chain is represented in six federal states, most of the markets are in Hesse. According to Migros, Tegut employs almost 7,500 people. The brand should be abandoned.