Hessen calls the Federal Government: the Cartel Office has 'significant concerns' about the takeover of Tegut

The German federal antitrust authority has raised “significant competition concerns” over Edeka’s planned acquisition of approximately 200 Tegut stores, according to preliminary assessments released last week. This development could prevent Edeka from acquiring as many Tegut locations as originally intended, particularly in regions where the merger would create dominant market positions. The Federal Cartel Office stated that its initial evaluation suggests the merger would cause substantial competitive issues on several local markets, especially in northern and eastern Hesse, Thuringia, northern Bavaria, and Baden-Württemberg. The Federal Cartel Office’s preliminary assessment found that the proposed merger would raise “substantial competition problems” on multiple regional retail markets. According to the authority, the combination of Edeka and Tegut might significantly reduce consumer choice and weaken competition in the affected areas. The office noted that it is currently examining whether the merger would lead to a deterioration in competition within the catchment areas of these markets. In 37 distinct regional market areas, the authority has identified serious concerns, with particular emphasis on areas such as northern and eastern Hesse, Thuringia, northern Bavaria, and Baden-Württemberg. Tegut operates around 300 stores in Hesse, Thuringia, and Bavaria, including locations in Göttingen, Stuttgart, and Mainz. Since 2019, Tegut has been part of the Swiss cooperative Migros Zurich. Earlier this year, Migros announced plans to sell Tegut entirely. In June, the Federal Cartel Office approved the sale of 36 Tegut stores in Hesse, Thuringia, and northern Bavaria to the supermarket chain Tante Enso based in Bremen. However, the current proposal involves Edeka acquiring a larger portion of Tegut's network, which has raised new regulatory concerns. The head of the Federal Cartel Office, Andreas Mundt, emphasized that the authority must assess the merger strictly under competition law guidelines. He clarified that other public interests, such as employment effects, fall under separate legal procedures. Approximately 7,700 employees are affected by the potential sale of Tegut stores. Some political figures have argued that job security and the role of local stores in community supply should be considered alongside competition law. Hesse’s Minister of Economics and Deputy Chancellor, Kaweh Mansoori, expressed skepticism toward the Federal Cartel Office’s preliminary findings. While acknowledging the authority’s independence, he stressed the need for policies that reflect the realities of local communities. He pointed out that closures of stores in rural areas can result in job losses and the loss of the only nearby supplier for some residents. Mansoori called on the federal government to take a stance, noting that a ministerial decision could be justified given the significance of the issue. According to the preliminary draft of the decision, the Federal Cartel Office does not see any concerns regarding procurement markets. It concluded that the increase in purchasing power resulting from Tegut’s added volume is negligible compared to the overall market. As a result, Edeka could still proceed with the merger if it makes commitments on the sales side. Reports indicate that Edeka, in coordination with Migros Zurich, has already submitted such a solution to the authority and is willing to forego the purchase of nine locations. The Federal Cartel Office must make a final decision on the sale by September 23.