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IP/08/1182

Brussels, 17th July 2008

Mergers: Commission opens in-depth investigation into dairy products merger between Campina and Friesland

The European Commission has opened an in-depth investigation under the EU Merger Regulation into the planned merger between Campina and Friesland Foods, both of The Netherlands and both active in a range of dairy product markets such as milk, cheese and lactose. The Commission’s initial market investigation has found that the proposed transaction raises serious doubts as to its compatibility with the common market given that the two companies’ compete on the same dairy product markets. In addition, it is possible that the combination of the two companies' activities will lead to potential supply problems for competitors. The decision to open an in-depth inquiry does not prejudge the final result of the investigation. The Commission now has 90 working days (until 24 November 2008) to take a final decision on whether the concentration would significantly impede effective competition within the Single Market.

Competition Commissioner Neelie Kroes said, “At a time of rising food prices, consumers deserve protection from any reduction of competition that runs the risk of pushing prices up in this sector. That appears to be a real risk with this proposed merger, and an in-depth investigation is therefore necessary.”

Both Campina and Friesland Foods are dairy cooperatives active both in the Netherlands and other EU Member States. Their activities involve several markets along the dairy food product chain, from the procurement and processing of fresh milk to the production of a variety of dairy and non-dairy products.

Campina is active in the procurement and processing of raw milk and the development, production and sale of dairy products for consumers, and dairy and non-dairy ingredients for professional and industrial customers.

Friesland Foods is active in the procurement and processing of raw milk and in the development, production and selling of dairy products. In addition to the dairy products, Friesland produces various non-dairy products and ingredients for nutritional and pharmaceutical products.

The Commission’s preliminary market investigation has shown that the transaction might substantially reduce competition in a number of dairy markets. It appears possible that the merged entity would dominate several dairy product markets. The Commission is particularly concerned by the impact of the planned transaction on the markets for fresh dairy products and cheese.

Campina and Friesland Foods are also each other's closest competitors in a number of other markets, such as desserts, flavoured drinks and cream. For industrial products sold to the food processing industry and to pharmaceutical companies (spray-dried emulsions, used in bakery applications, and pharmaceutical lactose, used in the manufacturing of pharmaceuticals), the merger might create a clear market leader and remove a strong alternative supplier.

More information on the case is available at
http://ec.europa.eu/comm/competition/mergers/cases/index/m100.html#m_5046


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