EU Commission approves acquisition of Galbani by Lactalis

The two firms have substantial sales of mozzarella in France and Italy. They also have a firm foothold on the Italian market for gorgonzola, crescenza and mascarpone.

25/04/06 The European Commission has cleared under the EC Merger Regulation the plan by the French group Lactalis to take over the Italian group Galbani Spa, a subsidiary of the investment fund BC partner. On completion of its market analysis, it concluded that the operation would not significantly distort effective competition in the European Economic Area (EEA) or in any substantial part of it.

“Those who like their insalata caprese and their tiramisu can rest assured that the merger will not mean higher prices or lower quality”, commented Neelie Kroes, the Competition Commissioner.

Lactalis and Galbani are both producers of Italian-type cheeses that they sell in many countries in Europe, particularly Italy and France, the two largest cheese markets on the continent. Lactalis owns the Invernizzi and Locatelli labels in Italy and the Président label in France, while Galbani owns the Santa Lucia and Vallelata labels.

The two firms have substantial sales of mozzarella in France and Italy. They also have a firm foothold on the Italian market for gorgonzola, crescenza and mascarpone. The Commission thus took great care to ensure that the new entity would not have sufficient market power to raise the prices of the cheeses concerned.

In the case of the French market, the Commission found that the competitive pressure exerted by Lactalis’ Président mozzarella on Galbani’s Santa Lucia mozzarella was limited, in terms of both price and quality. In the case of the Italian market, the two firms will own a number of widely sold labels but these are, if anything, mid-market labels or labels at the lower end of the market and they will not only be up against competition from other producers of low-priced cheeses, but also from many traditional regional producers who attach great importance to the quality of their products.