Germany’s antitrust authority is warning that increasing consolidation within the nation’s food retail sector could lead to higher prices for consumers, stemming from a recent investigation prompted by earlier farmer protests in 2024. The report from the independent Monopsony Commission identifies edeka, Rewe, Schwarz Group, and Aldi as the dominant players controlling a substantial share of the market. Concerns center on the growing power of these retailers-and some manufacturers-at the expense of both consumers and agricultural producers,raising questions about competition and supply chain dynamics within a vital sector of the German economy.
Germany’s antitrust authority is raising concerns about further consolidation in the country’s already highly concentrated retail sector, warning that additional large-scale acquisitions could lead to higher prices for consumers.
The warning comes after a government-ordered investigation sparked by farmer protests earlier in 2024. The Monopsony Commission, an independent advisory body, found that while food prices are rising, agricultural producers are seeing a diminishing share of the revenue. “The power of food retailers and some manufacturers has increased significantly to the detriment of consumers, while agriculture is often exposed to global market risks,” said Tomaso Duso, Chairman of the Monopsony Commission.
The commission’s report characterizes the food retail sector as an oligopoly dominated by a handful of players:
- Edeka Group,
- Rewe Group,
- Schwarz Group (Lidl, Kaufland)
- and Aldi Nord and Aldi Süd (combined).
These companies collectively control a substantial portion of the market. According to the report, market concentration has “increased significantly over the past two decades – not least due to numerous mergers.”
This increased concentration has coincided with rising average profit margins and consumer prices. The major retail chains have also extended their influence further up the supply chain, including through the development of their own manufacturing capabilities.
“The high concentration in many areas is a cause for concern from a competition policy perspective,” the experts stated, emphasizing that “the remaining competition in supply chains must be urgently protected.”
The commission is urging the Federal Cartel Office to take action, stating that “merger control must take the entire supply chain into account.” The report also criticized the insufficient blocking of mergers that harm competition throughout the supply chain, citing the 2016 acquisition of Kaiser’s Tengelmann by Edeka as a prime example. The deal, approved by the then-Economic Minister, was seen as significantly damaging to competition in the food retail sector.
The Edeka-Kaiser’s Tengelmann deal was particularly contentious. Initially blocked by the competition authority in 2015 due to concerns about Edeka’s growing market power, it was surprisingly approved in 2016 by the Economic Minister under strict conditions, primarily focused on protecting jobs. A court briefly halted the process, but a compromise was eventually reached: Edeka transferred dozens of stores to rival Rewe. The deal closed at the end of 2016, and by 2017, the Kaiser’s Tengelmann brand had largely disappeared, with stores operating under the Edeka or Rewe names. This case remains a rare instance where job preservation concerns outweighed competition law considerations.
The findings underscore the ongoing debate surrounding competition and pricing power within the German food industry, a sector vital to the country’s economy. The commission’s recommendations could lead to increased scrutiny of future mergers and acquisitions, potentially reshaping the competitive landscape.
A stock image illustrating the topic. Címlapkép forrása: Getty Images
