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DAIRY INDUSTRY : CONDITIONAL GREEN LIGHT FOR DUTCH MERGER.

The proposed merger of two Dutch cooperative companies operating in the dairy sector may pose competition problems on the supply markets for raw milk, fresh dairy products and cheese in the Netherlands and for long-life dairy drinks in the Netherlands, Belgium and Germany. The European Commission therefore approved this operation, on 17 December, dependent on certain conditions.

Both Campina and Friesland Foods are dairy cooperatives active primarily in the Netherlands and other EU member states. Their activities involve several markets along the dairy food product chain, from the procurement and processing of raw milk to the production of a variety of dairy and non-dairy products.

With a view to removing the Commission's concerns, the parties made the commitment to divest Friesland Foods' fresh dairy product business. They also agreed to divest one of Campina's cheese plants in Bleskensgraaf and two Campina brands for long-life dairy drinks.

Moreover, they set out remedies to ensure access to raw milk for the fresh dairy and cheese businesses to be divested by the parties as well as for their competitors in the fresh dairy and cheese markets in the Netherlands. Both divested businesses would in a first stage be able to source raw milk from the merged entity under a transitional supply agreement. Subsequently, a foundation (Dutch Milk Fund) would be set up to ensure access to raw milk to the divested businesses and other competitors. The merged entity, FrieslandCampina, would reduce exit barriers for dairy farmers who might wish to leave the new cooperative.

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Publication:European Report
Date:Dec 18, 2008
Words:251
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