Suspicion of violation of prohibition to demand unjustified benefits from suppliers – Kaufland modifies its special demands on suppliers

The Bundeskartellamt has discontinued its investigations against Kaufland into its suspected violation of the prohibition to demand unjustified benefits from suppliers (“Anzapfverbot”) after the company specified its special demands due to the proceeding. Kaufland, which belongs to the Schwarz Group, had demanded special benefits from its suppliers within the context of its acquisition of Real stores (see press release of 17 March 2021).

Demands for special benefits can constitute a prohibited abuse of market power if a powerful company uses its market power to demand benefits from its suppliers without any objective justification. The Bundeskartellamt had also conducted similar investigations against Edeka. After the suspicion against Edeka could not be confirmed, this proceeding was terminated (see press release of 12 May 2021).

Andreas Mundt, President of the Bundeskartellamt: “It is important that these kinds of special demands are not made without relevant services provided in return. These demands will only be made by Kaufland if a supplier accepts the demand and actually benefits from a service provided in return. In practical terms this could involve, for example, the listing of a supplier in new stores, increased sales and advertising. We have terminated the proceeding now that the special conditions have been modified accordingly.”

The Bundeskartellamt's assessment of the special conditions always depends on the respective relationship between Kaufland and its suppliers. The proceeding could be terminated because Kaufland has specified its special demands and return service agreed with its suppliers in such a precise and binding manner that they no longer raise any competition concerns.

In future suppliers will be able to better calculate in each individual case to what extent they benefit from the service provided by Kaufland in return. Kaufland will receive remuneration if a supplier wishes to be listed in one or more new Kaufland stores and actually achieves higher sales as a result (referred to as distribution remuneration). However, Kaufland will forgo remuneration if a supplier’s sales fall clearly behind expectations (i.e. they significantly deviate from corresponding sales achieved in comparable existing Kaufland stores). Remuneration will also be payable if Kaufland performs specific advertising measures for its suppliers (referred to as sales promotion bonus). The suppliers will be informed about this.

In assessing the special demands the Bundeskartellamt also took into account that these will only be imposed by Kaufland for a limited time. These will end with the complete integration of the former Real stores at the end of 2022. There will also be no double remuneration: In relation to the applicable conditions agreed at the annual talks, the services will include additional listings or additional advertising measures for Kaufland’s suppliers concerned.

Kaufland will also clarify details of the agreement on distribution remuneration and sales promotion in writing to its suppliers. On this basis the Bundeskartellamt has decided to terminate the proceeding against Kaufland.