FrieslandCampina Achieves Conditional Green Light for Zijerveld&Veldhuyzen and Den Hollander Acquisitions

15 Apr 2013 --- The European Commission has authorised under the EU Merger Regulation the proposed acquisition by the leading Dutch dairy cooperative FrieslandCampina of two Dutch companies: Zijerveld & Veldhuyzen B.V., a specialised cheese wholesaler, and Den Hollander Food B.V., a packaging services provider.

The clearance is conditional upon the implementation of a package of commitments offered by FrieslandCampina. The Commission had concerns that the transaction, as originally notified, would have significantly reduced competition on the market for the production and sale of semi-hard goat cheese in the Netherlands. The commitments address these concerns as they will ensure that sufficient quantities of semi-hard goat cheese are available to third parties.

The proposed transaction, as originally notified, would have combined the two leading producers and suppliers of semi-hard goat cheese in the Netherlands, leading to very high market shares. While FrieslandCampina is the top Dutch producer, the target has an exclusive supply arrangement with Amalthea van Dijk B.V., a Dutch cooperative of goat farmers which is the country's second biggest producer of this type of cheese.

The Commission's investigation indicated that customers who buy semi-hard goat cheese in the Netherlands show a clear preference for cheese produced in the Netherlands from Dutch milk. This means that imports are limited and would therefore not constitute a sufficient competitive constraint on the merged entity. Furthermore, competition from alternative suppliers within the Netherlands would have been limited.

In order to address these concerns, FrieslandCampina undertook to amend the existing supply arrangement between the target and Amalthea so that competitors have access to a significant part of the goat cheese produced by Amalthea. In addition, FrieslandCampina will stop outsourcing the production of semi-hard goat cheese to Amalthea, thereby ensuring that such production capacity will be available to third parties. At the request of third parties, FrieslandCampina will also make available raw goat milk for the production of semi-hard goat cheese.

In view of the remedies proposed, the Commission concluded that the transaction, as modified, would not significantly reduce competition. This decision is conditional upon full compliance with the commitments.

The transaction was notified to the Commission on 19 February 2013.

The Commission assessed the impact of the proposed transaction on a number of markets for dairy products where the merging parties' activities overlap. These markets relate to Dutch-type cheese (namely Gouda, Edam and Maasdam), semi-hard goat cheese, cheese packaging services, value-added yoghurt and quark, portion-pack dairy desserts and packet butter with additives.

The Commission also examined vertical relationships arising from the merging parties' activities, since FrieslandCampina is a cheese producer and the target is active downstream as a wholesaler and in the packaging market.

With the exception of semi-hard goat cheese, the Commission's investigation confirmed that the proposed transaction would not raise competition concerns on any of the markets examined, in particular because in most instances the market share increment was limited or the merged entity would continue to face competition from a number of competitors.

FrieslandCampina is a Dutch dairy cooperative active in the procurement and processing of raw milk and in the development, production and selling of dairy products. In addition, it produces various non-dairy products and ingredients for nutritional and pharmaceutical products. FrieslandCampina is itself the result of a merger of two Dutch dairy cooperatives which the Commission authorised in 2008 after an in-depth investigation (see case M.5046).

Zijerveld is a Dutch specialised cheese wholesaler which provides value-added services such as category consultancy, storing, maturing and distribution of cheese.

Den Hollander is a Dutch cheese packaging wholesaler which provides services such as cutting, slicing, grating and packaging of cheese.

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).