German regulators approve 5 billion euros Karstadt-Kaufhof merger
Staff Writer |
The Bundeskartellamt has cleared the merger between Karstadt Warenhaus and Galeria Kaufhof.
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The parent companies are SIGNA Retail and Hudson Bay Company (HBC) respectively. The combined turnover of Karstadt and Kaufhof is approx. 5 billion euros.
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), “underwearâ€, “sports/outdoorâ€, “games/toysâ€, “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 “underwearâ€, “household textiles†and “bagsâ€.
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. ■