The Bundeskartellamt has today cleared EDEKA’s acquisition of the Handelshof group. The merger concerns the acquisition of 100% of the limited partner shares and sole control of the Handelshof group by EDEKA ZENTRALE AG & Co. KG and EDEKA Foodservice Stiftung & Co. KG.

Andreas Mundt, President of the Bundeskartellamt: “We have analysed the sales and procurement markets in this case in greater depth and found that the EDEKA/Handelshof merger did not pose a problem to competition in any of the regional food wholesale markets. The procurement side was also subject to careful economic assessment as we know that EDEKA has a strong market position here. However our investigations have shown that with well below 0.5 % the Handelshof group’s share of the total nationwide procurement volume could be considered so small that EDEKA’s increase in share resulting from the acquisition will have no significant effect on competition.”

After intensive preliminary investigations the examination of the merger could be concluded within the one-month first phase of merger control proceedings. As part of its investigations the Bundeskartellamt consulted over 100 competitors and customers as well as business associations. In particular, the market areas of Bielefeld, Detmold and Arnsberg/Hamm were subject to an in-depth analysis.

The food wholesale market includes the sale of food, products from the non-food-I segment (especially drugstore products) and additional product ranges from the non-food segment to commercial customers (e.g. retailers, the catering sector and bulk customers).

The Handelshof group operates 16 cash & carry wholesale markets in North Rhine-Westphalia, Lower Saxony and Mecklenburg-Western Pomerania and is also active in providing wholesale delivery services. In 2018 the group’s turnover totalled approx. 640 million euros. In 2018 the EDEKA group’s turnover amounted to 53.7 billion euros in Germany alone. The group is mainly active in the cash & carry and delivery services segments via EDEKA Foodservice which has business locations throughout Germany, with the exception of the north of Germany.

In a nationwide comparison the merged company EDEKA/Handelshof ranks behind its competitors such as Metro and Transgourmet in the food wholesale sector. However, the situation on the regional markets is relevant in terms of competition. Based on the results of its investigations the Bundeskartellamt defined a single product market for cash & carry and delivery services and assessed the merger on the basis of a geographic market covering a radius of 75 kms or alternatively 100 kms around the acquired Handelshof locations.

EDEKA and Handelshof together only achieve market shares of 30-35 % in the Bielefeld and Detmold regional markets and hence are by far the most powerful suppliers in these markets. Nevertheless, in these regions where the two companies have a relatively strong presence, the possibilities for customers to switch to other wholesalers are sufficiently significant. The merger is therefore not expected to significantly impede competition.

One result gained from the current investigations was that the former concept for defining the market on the sales side had to be altered. In the EDEKA/Ratio merger control proceeding in 2011 the Bundeskartellamt still defined separate markets for cash & carry and wholesale delivery services respectively. However, the significance of wholesale delivery services and customers’ willingness to switch from purchasing via cash & carry to delivery services have greatly increased in recent years. Due to less stringent minimum purchase requirements, it is now much easier for customers to make use of these services. Factors which might favour the use of such delivery services are that they save time, meet hygiene requirements or ensure that the refrigeration chain is effectively maintained. In the final analysis the authority has now defined a single market for cash & carry and wholesale delivery services.

EDEKA already has a strong market position throughout Germany vis-à-vis manufacturers and suppliers. It has high market shares on the various procurement markets. The purchase volume of the Handelshof group will marginally strengthen EDEKA’s market position. The increase accounts for well under 0.5 % of the procurement volume of the German food retail sector in the areas of food and non-food I. The Bundeskartellamt has carefully assessed this increase and found that it was too low to assume that it would affect EDEKA’s market position on the procurement markets in such a significant way as to justify prohibiting the merger. It was considered that Handelshof was not as significant as Kaiser’s Tengelmann, either for the continuation of a purchasing cooperation between small and medium-sized wholesalers or as an alternative for the access of suppliers to the market.

Further information on this proceeding is available in a case summary (in German) on our website.