As Italian antitrust authorities investigate domination of the milk sector by two giants – Granarolo and Parmalat – an emerging third force may reduce pressure that the latter’s expansion through acquisitions is stifling competition.

Milk group Pescheria Borromeo in Milan (annual sales Lit300bn from 220 million litres of milk) announced it will go public in its drive to become the third force in the milk sector worth Lit5,500bn and produces 14.5 million hectolitres a year. They said they hope to attract new shareholders, including Yomo, Cooperlat and the Turin Milk Company.

Meanwhile, antitrust authorities are investigating the purchase by Granarolo of the Vicenza milk company to see if the deal restricts fair competition. The decision will be announced 10 may 2001.

Earlier, investigators had forced Parmalat to cede some operations for the price of taking over the dairy operations of its national rival Cirio. Parmalat and Granarolo have gained control of over 60% of the national market through aggressive acquisitions – Parmalat at home and abroad and Granarolo so far mainly in Italy but with plans to branch out to other countries.

The main means of expansion in the Italian dairy market is through acquisition, since sector maturity rules out production increases.

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By GlobalData

Industry analysts say one reason why the once fragmented sector (some 150 producers in the mid 1980s) is dominated by a few giants was because of the preference of super and hypermarkets (which have 65% of fresh milk sales) to deal with firms holding a critical mass.

By Hilmi Toros, correspondent