EU scrutinises Mondelez-Douwe Egberts Master Blenders coffee deal

By Caroline SCOTT-THOMAS contact

- Last updated on GMT

Related tags: European union

The Commission is concerned the deal could produce a monopoly in the single serve coffee market in particular
The Commission is concerned the deal could produce a monopoly in the single serve coffee market in particular
The European Commission has opened an in-depth investigation of Mondelez International’s proposed $5bn joint venture with competitor coffee firm Douwe Egberts Master Blenders 1753.

The proposed deal would create the world’s second-largest coffee company, behind Nestlé, combining the two companies’ coffee businesses under the name Jacobs Douwe Egberts. The Commission is concerned that the deal would stifle competition, particularly in the single serve coffee market.

Both companies own major coffee brands: Douwe Egberts Master Blenders (DEMB) owns L'Or, Douwe Egberts, Senseo and Merrild, while Mondelez owns Carte Noir, Jacobs, Gevalia, and Tassimo.

“The Commission has concerns that the proposed transaction may reduce competition for various coffee formats in Austria, France, Denmark and Latvia and for single-serve systems in multiple Member States,”​ the Commission said in a statement. “…The deal would bring together DEMB's Senseo and Mondelez's Tassimo systems, which are two of the four leading systems in Europe (being the other two Nestlé's Dolce Gusto and Nespresso). The Commission has concerns that this would lead to higher prices for customers of machines and consumables and to less innovation.”

The companies have already made commitments intended to address the Commission’s concerns, but these were considered inadequate.

If it goes ahead, the venture is expected to bring in revenue of more than $7bn in the first year. Upon completion, Mondelez is set to receive about $5bn in cash and a 49% stake in the new company.  

The Commission will decide on the deal by May 6.

Related topics: Business

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