Plans for a merger between Dutch dairy groups Campina and Friesland Foods have been thrown into doubt after the EU said the deal could hit competition in the sector.
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The European Commission yesterday (17 July) launched an in-depth investigation into the move, which was announced in April.
The Commission said an initial study into the potential impact of the proposed deal on competition in the dairy sector “raised serious doubts” over whether the merger would be compatible with EU competition rules.
“It appears possible that the merged entity would dominate several dairy product markets,” the Commission said. “The Commission is particularly concerned by the impact of the planned transaction on the markets for fresh dairy products and cheese. Campina and Friesland Foods are also each other’s closest competitors in a number of other markets, such as desserts, flavoured drinks and cream.”
The proposed deal between Campina and Friesland would create one of the world’s largest dairy companies with combined sales of EUR9.1bn (US$14.4bn).
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By GlobalDataCompetition Commissioner Neelie Kroes said: “At a time of rising food prices, consumers deserve protection from any reduction of competition that runs the risk of pushing prices up in this sector. That appears to be a real risk with this proposed merger, and an in-depth investigation is therefore necessary.”
The Commission also warned that the combination of Campina and Friesland’s ingredients businesses might hinder competition.
“For industrial products sold to the food processing industry and to pharmaceutical companies (spray-dried emulsions, used in bakery applications, and pharmaceutical lactose, used in the manufacturing of pharmaceuticals), the merger might create a clear market leader and remove a strong alternative supplier,” the Commission said.
The probe will last 90 days and the Commission said a decision would be issued by 24 November.
