On October 9, 2019, the FCO unconditionally cleared Rewe-Zentralfinanz eG’s (“Rewe”) acquisition of wholesaler Lekkerland AG & Co. KG (“Lekkerland”).[1] Rewe is mainly active as a food retailer, but also as a food wholesaler, supplying fresh and convenience food to Aral AG’s gas station shops. Lekkerland is a German wholesaler for food and tobacco products whose principal clients are gas station shops, convenience stores and kiosks.
The concentration was originally notified to the European Commission. The European Commission referred the German and Austrian aspects of the case to the FCO and the Austrian Federal Competition Authority (“FCA”) in July 2019 and cleared the remaining aspects of the case in August 2019.[2] The FCO already initiated its comprehensive investigation immediately after the referral decision. This enabled the FCO to clear the case in Phase I in October 2019, even though the parties had only formally notified the transaction in September 2019, triggering the formal review period.
The FCO found that the parties’ combined share in an overall wholesale market for food would be small, but in a possible segment for the wholesale of food to gas station shops and convenience stores above 40%. However, the FCO concluded that the countervailing bargaining power of gas station chains, the substitutability of the parties’ product portfolio with offers from specialized wholesalers, competition by cash-and-carry wholesalers and potential new market entrants will constrain the combined entity post-merger. While manufacturers voiced concerns regarding the merged entity’s increased purchasing power, the FCO considered, first, that the addition of Lekkerlands’s wholesale activities would not have a significant impact on Rewe’s bargaining power and, second, the combined entity would not be able to influence the gas stations’ product portfolio since most branded products are indispensable for convenience stores and there would thus be no credible threat of delisting.
In addition, the FCO found that the transaction would have no significant impediment to effective competition in the German wholesale market for tobacco in spite of Lekkerland’s market share exceeding 50%, concluding that Rewe’s activities in this segment were only ancillary to its food wholesale activities.
In Austria, the FCA’s concerns regarding anticompetitive effects on the supply to gas station shops were resolved by Rewe committing to carve out Lekkerland’s Austrian subsidiary from the entire transaction.[3]
[1] FCO Press Release, October 9, 2019, available in English here. The FCO’s case report of October 9, 2019 is only available in German here.
[2] Rewe/Lekkerland (Case COMP/M.9142), Commission decision of August 7, 2019, available in English here.
[3] FCA Press Release, October 21, 2019, available in English here.