Higher prices possible

Kika/Leiner bankruptcy: concern about lack of competition

Following the recent bankruptcy of the Kika/Leiner furniture chain, only two large providers are in danger of remaining in Austria: the XXXLutz Group and Ikea.

(Bild: Krone KREATIV/APA, AFP)

Following the recent bankruptcy of the Kika/Leiner furniture chain, there is a risk that only two large providers will remain in Austria: the XXXLutz Group (Mömax, Möbelix) and Ikea. Without competition, customers could face higher prices as a result of market concentration, said Natalie Harsdorf, Director General of the Federal Competition Authority (BWB).

"But if there are no alternatives, the BWB cannot conjure up competition, so to speak," Harsdorf continued.

Barriers for new providers
If competition works, new players should enter the market after the withdrawal of a market participant, but there are barriers to market entry. For example, a new provider must reach a certain size in order to be competitive and it needs functioning supply chains. According to Harsdorf, the furniture trade is an area that is "relatively static".

If there is such a high concentration in a market and so little competition, then that naturally makes me very unhappy as a competition watchdog, because it usually has negative consequences for consumers.

Natalie Harsdorf, Generaldirektorin der Bundeswettbewerbsbehörde

Bild: APA/GEORG HOCHMUTH

Future of Kika/Leiner to be decided by mid-January
Following the insolvency of Kika/Leiner, the next few weeks until mid-January will determine whether and how things will continue. The insolvency administrator must examine whether a positive forecast for the company's continued existence is possible and whether there is possibly an investor - such as a furniture retailer from abroad - who wants to expand into Austria.

Following the insolvency in the previous year, 23 of the 40 furniture stores that were still open at the time were closed in summer 2023. 11 of the former Kika/Leiner properties were recently purchased by the XXXLutz Group. According to the company, XXXLutz lawyers are examining whether a notification to the Federal Competition Authority (BWB) is necessary.

(Bild: APA/HELMUT FOHRINGER)

Harsdorf said that XXXLutz had not yet filed a notification for the real estate purchases. However, the competition authority is currently examining whether "a notification obligation would have existed in the current constellations". There has not yet been a substantive examination, "but what is clear is that if I have a company that has a very powerful market position, then the prohibition of abuse of market power also applies", explained 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.