European Commission Opens In-depth Investigation into Proposed Acquisition of Parts of GBI by Associated British Foods

ABF is an international food, ingredients and retail group. Its activities include the production and sale of yeast, managed through the AB Mauri division, which has production plants worldwide, including five plants in the EU.

18/04/08 The European Commission has opened a detailed investigation under the EU Merger Regulation into the proposed acquisition of certain parts of GBI of The Netherlands by the UK-based company Associated British Foods (ABF). Both companies produce dry, compressed and liquid baker's yeast. The Commission's initial market investigation has indicated that the proposed merger raises serious doubts as to its compatibility with the Single Market because of possible competition problems in particular on the market for compressed bakers' yeast in Portugal, Spain and France, the Member States which referred the case to the Commission. A decision to open an in-depth inquiry does not prejudge the final result of the investigation. The Commission now has 90 working days (until 28 August 2008) to take a final decision on whether the proposed transaction would significantly impede effective competition within the European Economic Area (EEA) or a significant part of it.

Competition Commissioner Neelie Kroes said “Following strong indications of competition problems during its initial investigation the Commission must make sure that the planned transaction would not adversely affect the quality or price of yeast products which are essential for bakeries of all types and sizes and, so directly affect the daily bread of European consumers.”

ABF is an international food, ingredients and retail group. Its activities include the production and sale of yeast, managed through the AB Mauri division, which has production plants worldwide, including five plants in the EU (UK, Ireland, Germany, Spain and Portugal). ABF also owns two bakery ingredients plants in the UK (Cereform) and distributes yeast from its plants across the EU and elsewhere in the world.

The core activity of the acquired parts of GBI is the production and sale of different types of yeast. The business comprises several European subsidiaries and assets of the GBI Group in Europe, excluding the UK. GBI is ultimately controlled by the Dutch private equity house Gilde Buy-Out Partners.

Yeast is an essential ingredient in the production of bread and other bakery products, pizza, dough bases, beer, wine and other foodstuffs. The current transaction concerns liquid, compressed and dry yeast for the bakery sector.

The Commission's initial market investigation identified a potential for adverse effects in compressed yeast markets in South-Western Europe (Spain, France and Portugal) where the operation would reduce the number of effective suppliers from three to two.

The transaction initially had been notified to National Competition Authorities as it did not meet the thresholds to be considered as a merger of a European dimension under the EU's Merger Regulation. The Commission's competence in this case is based on requests to the Commission to examine this concentration made by the competition authorities in Spain, Portugal and France, under Article 22 of the Merger Regulation.