Mergers: Commission clears proposed acquisition of Numico by Danone, subject to conditions
The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of the Dutch company Numico by the French group Danone. Both companies are major suppliers of baby food and baby milk products. The Commission's decision is conditional upon the divestment of Numico's baby milk and baby drink business in France, Danone's baby meals, baby milk, baby snacks, and baby drink activities in Belgium, and Danone's baby meal and baby snacks activities in The Netherlands. In light of these commitments, the Commission has concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.
Competition Commissioner Neelie Kroes said "In view of the remedies offered, I am satisfied that competition will remain vigorous after the merger and that parents will continue to benefit from innovation and fair prices to feed their babies and toddlers."
Danone is a worldwide company organised around two core activities, bottled water and fresh dairy products.
Numico is a company specialised in the manufacture and distribution of baby food and clinical nutrition.
The Commission examined the competitive effects of the proposed merger in the baby food and baby milk markets. It had serious doubts as to the compatibility of the proposed transaction, as initially notified, as regards the infant formula and follow-on milks (IFFO) and baby drink markets in France, the baby meal, baby growing-up milks (GUM), baby snacks and baby drinks markets in Belgium, and on the baby meal and baby snack markets in The Netherlands.
In France, the main overlap of activities occurred on the market for infant milk, where Danone's and Nestlé's leading positions are disputed by Numico with its brands Nutricia and Milupa. The Commission's market investigation suggested that Numico had played an important role in making the market competitive, both in terms of keeping prices down and introducing innovative products. A similar conclusion was reached for the baby drink market.
As regards Belgium, the market investigation showed that Danone and Numico were face-to-face competitors on the baby meal market, and the proposed concentration as notified would have significantly weakened competition. Furthermore, Numico is a strong player on the grown-up milk and baby drink markets, and a combination of Numico and Danone would also have harmed competition on these markets. The same conclusion was reached for the market for baby snacks, where Danone's sales (e.g. with the brand Betterfood) represent more than half of the total market.
With respect to The Netherlands, the proposed concentration as notified would have removed one of the few competitors to Numico on the baby meal market, whereas its effect on the baby snack market would have been similar to that in Belgium.
To address the Commission's serious doubts as to the compatibility of the proposed transaction with the Single Market, Danone notably committed to divest the Numico baby milk business in France, consisting of the assignment and licensing of brands, an optional production facility, and the transfer of the necessary know-how and personnel. As regards the Belgian and Dutch markets for which the Commission raised serious doubts, Danone offered a package including the licensing of its brand Blédina.
The Commission analysed the undertakings submitted by Danone and, in light of the comments made by third parties, concluded that they would remedy the serious doubts and so ensure that effective competition was not impeded as a result of the takeover.
More information on the case will be available at:
http://ec.europa.eu/comm/competition/mergers/cases/index/m96.html#m_4842