The Bundeskartellamt has today cleared plans by Harry-Brot GmbH to take over Glockenbrot Bäckerei GmbH & Co. OHG’s industrial bakery in Bergkirchen and to create two joint ventures with the REWE Group. Bread and baked goods producer Glockenbrot is currently part of the REWE Group.

Andreas Mundt, President of the Bundeskartellamt: “Harry-Brot is by far the leading bread and baked goods producer in Germany. The planned takeover of REWE’s subsidiary Glockenbrot will further strengthen this position. However, we have not identified any serious competition concerns that would have justified prohibiting the merger. Our assessment is based on the decisive factor that Glockenbrot has so far produced the goods for REWE entirely within the group and that the merger will only change the competitive situation for other market participants to a limited extent. In the market for pre-packaged baked goods, which is the market mainly affected, there will still be viable competitors after the merger. We will continue to keep an eye on the competitive effects of the additionally planned cooperation between REWE and Harry-Brot.”

In the financial year 2024, Harry-Brot generated a turnover of around 1.3 billion euros. The company produces bread and baked goods for food retailers and other customers in ten baking facilities. It markets its branded products in the food retail sector and also operates as a private label supplier.

Glockenbrot has so far produced private label bread and baked goods for the REWE Group at two baking facilities in Frankfurt and Bergkirchen. REWE intends to stop its own production of bread and baked goods and instead to enter into a cooperation with Harry-Brot to supply REWE. This cooperation involves Harry-Brot’s acquisition of the industrial bakery in Bergkirchen and the creation of two joint ventures to act as property holding companies for the industrial bakery in Bergkirchen and a new baking facility in Erlensee. The two bakeries will be operated by Harry-Brot alone, without any possibility for REWE to influence the bakeries’ operation. The Glockenbrot facility in Frankfurt will be closed down. The project is linked to a long-term supply and cooperation agreement.

The merger will particularly affect the market for pre-packaged bread, that is industrially packaged, ready-to-eat bread (including rolls) sold to consumers on the self-service shelves of food retailers. In this sector, Harry-Brot has a market share of more than 40 per cent in Germany. The merger constitutes a vertical disintegration, meaning the removal of a producer from the REWE group of retailers. The volumes produced by Glockenbrot for REWE in the past were not to be included in the total market volume as they constituted intragroup sales. REWE now intends to outsource production, but as a result of the cooperation the volumes will initially be supplied by Harry-Brot, increasing Harry-Brot’s market share. However, compared to the situation before the merger, the competitive situation will change only marginally for the other market participants.

Despite Harry-Brot’s strong market position, the Bundeskartellamt has found that competition will remain sufficiently strong after the merger and that food retailers will have sufficient alternative sources of supply. In fact, the acquisition of the baking facility in Bergkirchen and the new baking facility in Erlensee are likely to expand the range of supply sources and increase competition, at least in southern Germany.

In addition, it is unlikely that the merger will significantly impede effective competition between rival producers. In this respect, it was particularly important to take into account that the Glockenbrot goods were previously produced internally for the REWE Group. As a result, other producers were unable to compete for these volumes even before the merger.

In the markets for pre-baked and bake-off products (partially baked goods which are delivered fresh or frozen to retailers and then fully baked in the store), which are also affected by the merger, the market positions of Harry-Brot and Glockenbrot did not give rise to competition concerns.