Melanie Johnson, UK Competition Minister, has given the go-ahead to the UK merger of Cargill’s acquisition of Cerestar.
Earlier this year the European Commission referred part of the acquisition – concerning the supply of glucose syrups and blends in the UK – to the UK competition authorities under Article 9 of the European Community Regulation (ECMR).
The Competition Commission has now concluded that this aspect of the merger would not be expected to operate against the public interest for the following reasons:
- The relevant geographic market for UK consumers of glucose syrups and blends extends at least to northern France and the Benelux countries, despite the cost of transport across the Channel.
- It is unlikely the merged company could raise prices for its products because of the presence of two strong competitors with UK plants and Continental plants close to the Channel.
- Continental producers located further from the Channel would exert an important indirect constraint by ensuring that their main competitors could not produce artificial capacity shortages in the long run.
- The lack of price transparency in the market and the financial need to maintain high capacity utilization would also discourage any form of collusion between the producers to restrict capacity and raise prices.
- Customers are large and powerful buyers who can and do switch between suppliers.