GERMANY: Edeka JV could fall foul of competition law
German retail giant Edeka may be forced to sell some of the discount stores in its new venture with local conglomerate Tengelmann.
The deal is set to be reviewed by the Bundeskartellamt, Germany's federal cartel office, which will rule whether the venture infringes local competition law.
Last month, Edeka won control of Tengelmann's discount business after the two sides agreed to jointly run their cut-price outlets.
Edeka will take a 70% stake in the venture, which will run the company's Netto discount outlets and Tengelmann's Plus stores. The venture will run around 4,200 stores in total, generating annual sales of about EUR11bn (US$16.1bn).
A spokesman for the Germany's cartel office said Edeka and Tengelmann could be asked to sell off some stores to meet competition law.
"We have found problems in [the retail] market in similar cases, so it is something we will look at very deeply," the spokesman told just-food from Bonn. He added store disposals were a "possibility".
However, Edeka, which stands to become Europe's fourth-largest grocer through its deal with Tengelmann, is not convinced disposals are necessary. "The geography is in our favour," an Edeka spokesman said.
He added that Edeka and Tengelmann would present their proposals to the competition authorities before Christmas with the two companies "on track" to seal the venture in May.
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