IP/08/995
Brussels, 23rd June 2008
Mergers: Commission approves takeover of Austrian retail chain ADEG by REWE Group, subject to conditions
The European Commission has approved under the EU Merger Regulation the proposed takeover of ADEG of Austria by the German REWE Group, subject to conditions. Both parties are active on the Austrian retail and wholesale markets for everyday consumer goods. The Commission was concerned that the strength of the combined company in certain Austrian regions could lead to higher prices for everyday consumer goods in Austria. During the Commission's preliminary investigation REWE proposed to divest outlets in the relevant regions. These commitments removed the Commission's concerns and it therefore concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.
Competition Commissioner Neelie Kroes said: "Rising food prices are a serious global problem. This case shows that competition policy can contribute by ensuring that retail markets remain as competitive as possible."
ADEG is currently jointly owned by ADEG independent merchants' organisation AÖGen, Edeka Chiemgau and by REWE which has a minority shareholding of 24.9%.
REWE is active on the Austrian retail market for everyday consumer goods through the retail chains Billa, Penny and Merkur. REWE is the market leader, closely followed by its competitor SPAR Austria. ADEG is a relatively small competitor.
In April 2008, REWE notified its intention to acquire control over ADEG to the Commission. Following the transaction, REWE would own 75% of ADEG, giving it sole control, while AÖGen would retain a minority interest of 25%.
The Commission's initial investigation found that the market shares in Austria would remain moderate following the transaction and that ADEG is currently not a strong competitive force on the Austrian market. However, during its preliminary investigation, the Commission was not able to exclude serious doubts that the combined strength of REWE and ADEG at the level of several Austrian districts would not result in increased price levels on the national retail market.
In response to the Commission's preliminary findings, REWE offered to sell all ADEG-owned shops in the relevant districts and to encourage ADEG merchants to leave the ADEG network. In the event that too few merchants left the ADEG network, REWE made a commitment to sell certain REWE outlets. This would reduce the presence of the combined entity in the affected regions and therefore remove the Commission's competition concerns.
More information on the case will be available at:
http://ec.europa.eu/comm/competition/mergers/cases/index/m100.html#m_5047
