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Bundeskartellamt clears merger between EDEKA and trinkgut subject to suspensive condition

Date of issue: 29.10.2010

Yesterday, the Bundeskartellamt cleared the acquisition of around 200 trinkgut beverage stores by the EDEKA group subject to conditions. The merger project is cleared subject to the suspensive condition that the companies sell about 30 outlets (trinkgut and Top beverage stores) in ten different markets, as well as the beverage logistics provider Maxxum, which so far has belonged to trinkgut.

The concentration concerns the market for the sale of beverages to end consumers in several regional markets, especially in North Rhine-Westphalia and Lower Saxony. With the merger EDEKA acquires an equal competitor (in terms of its sales concept) in the beverage retail sector. trinkgut is also the largest beverage store chain in Germany.

To avoid a prohibition of the merger by the Bundeskartellamt, EDEKA and trinkgut approached the authority with an offer to undertake certain commitments. Following intense negotiations on which form these commitments should take, the acquisition was cleared subject to specific obligations to divest.
Andreas Mundt, President of the Bundeskartellamt stated: "In view of the high level of concentration in the food retail sector, any merger project in this sector has to be closely examined. This applies even if a merger would only lead to relatively small market share additions. Competition in the retail sector results in direct benefits for the consumers. We have to ensure that small changes to the market structures in this sector do not gradually result in their substantial deterioration."

Competitive problems in regional sales markets
The Bundeskartellamt examined approx. 80 regional markets. In its investigation, it included all trading companies with considerable market significance, as well as more than 100 small and large beverage stores.

According to the Bundeskartellamt's findings, the concentration is likely to create or strengthen a dominant position for EDEKA in ten regional markets.

The concentration will also lead to an increase in EDEKA's purchase volume of beverages. In relation to smaller competitors, this enables EDEKA to enforce better purchasing conditions and thus also gain a competitive advantage on the sales markets, which further secures its market position.

In addition, with the acquisition of the beverage logistics provider Maxxum, EDEKA would be able to directly negotiate purchase conditions with manufacturers of beverages, independent of the market level of the specialised wholesale trade with beverages.

Strong market position also on procurement markets
The Bundeskartellamt's investigation of the market conditions in the procurement markets has shown strong indication that EDEKA, REWE and the Schwarz group form a dominant oligopoly on the procurement markets for manufacturers' brands in the area of non-alcoholic beverages. However, this fact was not sufficient to result in a prohibition of the merger project.

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