March 17, 2016 / 2:10 PM / 3 years ago

Germany allows supermarket deal on condition no jobs are lost

A combination of two pictures show the logo of grocery chain Kaiser's (L) and Edeka in Berlin, Germany, January 12, 2016. REUTERS/Fabrizio Bensch

BERLIN (Reuters) - Germany’s Economy Minister overturned a decision by the competition watchdog and approved a deal for Edeka, the country’s biggest supermarket group, to buy grocery chain Kaiser’s, on condition that jobs are not lost.

Germany’s federal cartel office stopped the planned deal between the unlisted retailers last year, saying the takeover would limit competition in big cities such as Berlin and Munich would could lead to price increases in Europe’s biggest economy.

Kaiser’s owner Tengelmann had warned that if the deal failed it could mean the closure of the supermarket chain and the loss of 16,000 jobs.

Economy Minister Sigmar Gabriel, who is leader of the Social Democrats, made it a condition of his approval that jobs at Kaiser’s would be safeguarded over the next five years.

Rival supermarket chain Rewe, which had also sought to buy Kaiser’s from Tengelmann, said it would fight the deal by filing a complaint with a German court.

Ralph Brinkhaus, deputy parliamentary floor leader of Chancellor Angela Merkel’s conservative bloc, said fostering competition in the long run should trump efforts to safeguard jobs for the short term.

“The approval of the Edeka/Tengelmann merger is very problematic in terms of regulatory policy,” Brinkhaus said.

The cartel office had said that the acquisition of Kaiser’s, which has 451 stores and annual sales of 1.8 billion euros (£1.4 billion), would give Edeka a market share of more than 10 percent in some places.

Edeka and Tengelmann said they welcomed Gabriel’s decision.

Reporting by Gernot Heller; Additional reporting by Nikola Rotscheroth; Writing by Maria Sheahan and Paul Carrel; Editing by Arno Schuetze and Elaine Hardcastle

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