Compromised Merger

The German antitrust body plans to block the take-over of Tengelmann’s Plus stores by Edeka’s Netto discount supermarket chain because the group would have then a dominant market position. Edeka’s plan is to create a new discount supermarket chain, which would compete with Aldi and Lidl. However Edeka’s share market already amounts to 25% and would be increased by the merger, which would be problematic.

Edeka and Tengelmann announced their merger plan last year. The joint venture would have a turnover of €11 billion, and will therefore be the 3rd German discount supermarket chain, behind Lidl (€12 billion in 2007) and Aldi (€27 billion in 2007). According to the companies’ plan, Edeka would have a 70 percent share in the new firm and Tengelmann 30 percent.

Now the two firms have to respond to the antitrust body’s concerns. The deadline is set to April 17, 2008.