The European Commission said today (29 March) that it has approved the acquisition of German ingredients company Degussa, by Cargill. The US company will take sole control of Degussa’s Food Ingredients (DFI) branch.
The commission had been concerned about overlap in the food ingredients that Cargill and DFI both hold a relatively strong market position for different types of lecithin.
Lecithin, an emulsifier extracted from soybeans and used by companies in the food industry such as chocolate manufacturers and bakers, has a wide functionality and unique good-for-you image meaning that manufacturers could not substitute another product. Moreover, European manufacturers only use GM-free lecithin, as EU laws would require them to label the presence of GM products otherwise.
The EU was concerned that the acquisition would diminish competition in an already highly restricted market. However, following a detailed investigation, the commission found that Brazilian and Indian manufacturers had been able to enter the sector thanks to the abundance of local raw materials. Some of these processors, the EU said, are beginning to establish themselves in Europe – meaning that the expanded Cargill business would not have much scope to increase prices.
Finally, the commission added, Cargill’s position in the lecithin market was not as established as had originally been thought.