Aug 24 2010 --- The European Commission has cleared under the EU Merger Regulation the proposed acquisition by the French group Lactalis of Spanish group Puleva's dairy business. The Commission concluded that the transaction would not significantly impede effective competition in Europe or Spain. Lactalis is set to buy the dairy business of Spanish food company Ebro Puleva for 630 million euros ($801.2 million).

Lactalis is a French group which manufactures and sells milk and dairy products, including a wide range of cheese, desserts and cream, in roughly 150 countries, under its own brand names and under those of distributors. Via its subsidiary, Lactalis Iberia S.A., Lactalis operates on the Spanish market, where it sells cheese and long-life milk.

Puleva is a Spanish group which produces and sells rice, pasta, sauces and dairy products. The transaction mainly concerns the dairy market in Spain, a market on which both Lactalis and Puleva operate. The acquisition plan covers only Puleva's dairy products.

The Commission's investigation concerned the supply of raw cow's milk in Spain and the downstream markets, also in Spain, of sales of basic long-life milk, flavoured milk, health drinks, liquid cream and "horchata", a drink made from tiger nuts.

With regard to the upstream market of the collection of raw cow's milk in Spain, the Commission considered that the transaction would not give rise to any competition problems either at national level in Spain, in three main geographical areas consisting of several administrative regions covering the north-east, north-west and south of Spain, or at a purely regional level (in particular in Galicia, Catalonia and Andalusia). The investigation thus confirmed that Lactalis would continue to account for a limited share of the demand.

The Commission also ruled out any competition problems on downstream markets of sales of milk, including the markets for long-life milk, flavoured milk, health drinks, liquid cream and "horchata". Here, too, the investigation showed that the new entity would have small market shares on these markets and/or would be restricted by the presence of major competitors and the brands sold by the distributors themselves.

The transaction was notified to the Commission on 2 July 2010.