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Clearance of merger between Karstadt and Kaufhof

Date of issue: 09.11.2018

The Bundeskartellamt has today cleared the merger between Karstadt Warenhaus and Galeria Kaufhof. The parent companies are SIGNA Retail and Hudson Bay Company (HBC) respectively. The combined turnover of Karstadt and Kaufhof is approx. 5 billion euros.

Andreas Mundt, President of the Bundeskartellamt: “We have closely examined the merger which raised no major competition concerns either from a consumer perspective or from the perspective of manufacturers and suppliers.  Although Karstadt Warenhaus and Galeria Kaufhof are the only department store operators which are active throughout Germany, there is no department store market as such which could be assessed from a competition point of view. Instead we had to examine the specific market conditions for approximately 20 different product categories at the department store locations of the respective companies because these differ to a certain extent. We have found that even in an isolated analysis of purely brick-and-mortar retailing, Kaufhof and Karstadt only achieve market shares of above 25% in individual product categories and regions. In most product categories online retailers are also an important shopping alternative for a fast-growing number of consumers. We took account of the increasing competitive pressure exerted by online sales in our assessment.”

Due to the very intensive preparation of the actual merger control proceeding, the in-depth examination of the merger could be concluded within the one-month first phase. In its investigation the Bundeskartellamt questioned about 100 retail companies and suppliers, including the largest online and offline retailers in Germany. The authority closely examined the product categories “bags” (suitcases/bags), “underwear”, “sports/outdoor”, “games/toys”, “household textiles” and “office products and stationery” because Kaufhof’s and Karstadt’s market positions are strongest in these product categories.

The results of the investigation showed that even in an analysis exclusively limited to brick-and-mortar sales, the merger does not raise any competition concerns which would justify prohibiting it. Kaufhof’s and Karstadt’s scope of action is controlled in all product categories and regions by various other brick-and-mortar competitors. The joint market shares of the companies only exceed 25% in a few relevant product categories and regions.

In addition strong competitive pressure is exerted by online sales. The share of online sales as a proportion of total turnover differs in the different product categories in Germany but is subject to very high growth rates in all segments, on average 10% per year.

Karstadt and Kaufhof will together have a strong market position on the procurement markets, i.e. in the relationship between the store operators and their suppliers, especially in the product categories “underwear”, “household textiles” and “bags”. However, manufacturers will have sufficient sales alternatives in the form of specialist retailers, both online and offline. Some manufacturers have expressed the concern that the two companies will have greater buying power in future and could therefore also demand better conditions. The Bundeskartellamt will closely observe this within the meaning of the Federal Court of Justice ruling on the so-called “Anzapfverbot” (i.e. the prohibition to demand unjustified benefits from suppliers).

In the “Sports/Outdoor” category Karstadt is a member of the purchasing cooperation Intersport, to which Kaufhof’s purchase volume would be added. The Bundeskartellamt reserves the right to examine this purchasing cooperation in more detail as a follow-up to the merger proceeding.

The real estate markets affected by the merger were unproblematic from a competition viewpoint.


The participating companies:

SIGNA Retail, a company controlled by Benko Privatstiftung, operates 79 department stores in Germany under the name of Karstadt Warenhaus GmbH and an online shop. Added to this are 29 specialist stores for sportswear operated by Karstadt Sports and also an online shop and further sports goods retailers.

HBC, based in Toronto, is a diversified retailer which is active in non-food retail in Canada, the USA and Europe. HBS also owns a number of commercial properties in the USA, North America and Germany. Its subsidiary Galeria Kaufhof, based in Cologne, operates 98 stores in Germany and an online shop. Furthermore, 16 stores in Belgium, 15 stores in the Netherlands and six Saks OFF 5th stores in Germany will be included in the new company.

Press release (pdf)

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