EC clears acquisition in the dairy market

The European Commission has approved the proposed acquisition of Nutricia Dairy and Drinks Group (NDDG), a division of Koninklijke Numico N.V., Netherlands, by Friesland Coberco Dairy Foods Holding N.V. (FCDF), Netherlands. Both companies are active in the dairy industry. The transaction does not raise any competition concerns. FCDF is owned by the Dutch dairy co-operative Zuivelcoöperatie de Zeven Provincien U.A. and has worldwide activities focussing on dairy products. NDDG is currently part of the Netherlands based Koninklijke Numico N.V. and produces dairy drinks, sports drinks and coffee whiteners. The main overlaps between the parties' activities concern flavoured dairy drinks and coffee milk in the Netherlands. In flavoured dairy drinks one can distinguish between various categories, such as fruit flavoured drinks and chocolate flavoured drinks. Coffee milk is used to whiten coffee in the same way as coffee cream, non-dairy coffee whiteners and to a certain extent milk. In its assessment the Commission has not decided to what extent these distinctions in the products reflect separate product markets. The Commission has come to the conclusion that the specific characteristics of the industry concerned will act as a constraint on FCDF's ability to increase prices after the transaction. These characteristics include strong competitors and potential competitors, strong countervailing powers from the customers, ease of entry through the existence of private labels and supply side substitutability regarding the different sectors as well as an over-capacity in the industry. Therefore the concentration does not create or strengthen a dominant position on the Common Market as a result of which competition would be significantly impeded in the EEA or any substantial part of it. On this basis the Commission has decided to clear the operation and declare it compatible with the common market and the functioning of the European Economic Agreement.