Kraft Foods has received approval from the European Commission for an acquisition of Cadbury – but the US food giant would have to sell businesses in Poland and Romania if it prevails.
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The Commission yesterday (6 January) said it would wave through a takeover of Cadbury if Kraft offloads the UK firm’s Polish and Romanian chocolate confectionery businesses.
The Commission said it had identified competition concerns within chocolate confectionery in Poland and Romania, where the combined market share of Kraft and Cadbury is “particularly high” and their brands are “competing closely”- in particular in the chocolate tablets markets.
Kraft, which on Tuesday raised the cash component of its offer for the Dairy Milk maker, said it would sell the businesses marketed under the Wedel brand and Cadbury’s domestic chocolate confectionery business in Romania in a bid to remedy the concerns.
To date, Cadbury’s board and its shareholders have rejected Kraft’s offer.
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By GlobalDataThe Commission concluded that a deal would “not significantly impede effective competition” in the European Economic Area or any substantial part of it.
Competition Commissioner Neelie Kroes said: “In view of the remedies offered, I am satisfied that the proposed takeover would not adversely affect competition anywhere in Europe and that consumers would not be worse off.”
The Commission added that while the market share of Cadbury is very significant in the UK and Ireland, the penetration of Kraft’s brands in these markets remains low.
In addition, it added that Kraft’s and Cadbury’s brands do not compete closely with each other, given the strong preference of UK and Irish customers for traditional UK chocolate as opposed to “continental types” of chocolate.
