After the recent bankruptcy of the furniture chain Kika/Leiner, there is a risk that only two major suppliers remain in Austria: the XXXLutz Group (Mömax, Möbelix) and Ikea. Without competition, customers could face higher prices due to market concentration, says Natalie Harsdorf, director general of the Federal Competition Authority (BWB).
“But if there are no alternatives, the BWB cannot raise competition,” Harsdorf continued.
Barriers for new providers
If competition works, new players should enter after one market participant leaves, but there are barriers to entry. A new supplier must reach a certain size to be competitive and needs functioning supply chains. The furniture business is an area that is “relatively static,” says Harsdorf.
The future of Kika/Leiner will be decided in mid-January
After the bankruptcy of Kika/Leiner, it will be decided in the coming weeks until mid-January whether and how things will proceed. The curator must check whether a positive prediction for the future of the company is possible and whether there may be an investor, such as a furniture dealer from abroad, who wants to expand to Austria.
After last year’s bankruptcy, 23 of the then forty furniture stores closed in the summer of 2023. The XXXLutz Group recently purchased 11 of the former Kika/Leiner properties. According to the company, XXXLutz’s lawyers would check whether registration with the Federal Competition Authority (BWB) is necessary.
Harsdorf said XXXLutz had not yet registered to purchase real estate. However, the antitrust authority is currently investigating whether “there would have been a registration obligation in the current constellations.” There is no substantive assessment yet, “but what is clear is that if I have a company that has a very powerful market position, the prohibition on abuse of market power also applies,” said Austria’s top competition watchdog.
According to market researcher RegioData, XXXLutz already has a market share of 34 percent, followed by Ikea with 19 percent and Kika/Leiner with 13 percent.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
