supermarket saga Tracing Gabriel's Missteps

Economics Minister Sigmar Gabriel faces an uncertain political future after a court accused him of mishandling the merger of Edeka and Kaiser's Tengelmann. He's on a damage-control mission as further details come to light.
German Economics Minister Sigmar Gabriel attends the weekly cabinet meeting at the chancellery in Berlin, Germany June 22, 2016.

Economics Minister Sigmar Gabriel's decision to overrule anti-trust authorities and approve the merger of two supermarket chains has come back to haunt him.

A court in Düsseldorf issued an injunction last week halted the merger of Edeka and Kaiser's Tengelmann due to concerns about how Mr. Gabriel wielded his authority.

Before approving the merger, Mr. Gabriel held secret talks with company bosses to extract guarantees that jobs would be protected after the merger.

Mr. Gabriel decided to take it easier on Edeka, allowing the supermarket chain to lay off 10 percent of Kaiser's employees in the first five years of the merger.

Those secret talks "justified concerns about prejudice and a lack of neutrality," according to the court.

Mr. Gabriel, who is also leader of the center-left Social Democrats and vice chancellor in the ruling left-right coalition, dismissed the accusations of bias as completely unfounded and vowed that his ministry would take further legal action in the case.

But critics in his own party have told Handelsblatt that Mr. Gabriel may well lose his job as economics minister and party chief.

That would torpedo his ambitions to run against Chancellor Angela Merkel in next year's general election.

It's still unclear, however, who was responsible for what at the Economics Ministry. The daily tabloid Bild reported that State Secretary Rainer Sontowksi was originally responsible for the merger.

After making the initial preparations, Mr. Sontowski handed the case off to his colleague, Matthias Machnig. According to Handelsblatt's sources, however, Mr. Machnig claims to have been only superficially involved in the process.

The ruling of the Düsseldorf court mentions correspondence between Mr. Gabriel and a state secretary in preparation for the controversial secret talks.

According to information obtained by Handelsblatt, Mr. Machnig was the state secretary who corresponded with Mr. Gabriel before the talks.

Mr. Machnig apparently pushed for a tough jobs guarantee that would have barred Edeka from laying off any of the 16,000 Kaiser's employees for five years, Der Spiegel news weekly reported.

But Mr. Gabriel decided to take it easier on Edeka, allowing the supermarket chain to lay off 10 percent of Kaiser's employees in the first five years of the merger.

This contradicts Mr. Gabriel's claims that he overruled the anti-trust authorities and approved the merger to protect jobs.

"It's thoroughly normal to develop different solutions during such a process," a spokesperson for the Economics Ministry said. "That's the only way to weigh the options."

The Düsseldorf court also criticized Mr. Gabriel for failing to document the results of his secret talks with Edeka and Kaiser's Tengelmann in the ministry's archives.

"There should have at least been a note outlining the results of the conversation," Bernhard Heitzer, a former state secretary in the Economics Ministry, told Handelsblatt.

Officials must have known that Mr. Gabriel's decision to intervene in the merger could provoke a court case, Mr. Heitzer said, making it all the more important to be as thorough and accurate as possible.

 

Heike Anger is an editor for economics and politics.  Thomas Sigmund is the bureau chief in Berlin, where he directs political coverage. To contact the authors: [email protected][email protected]