EC cleared the deal between Lutosa of Belgium & McCain of Canada

The clearance is conditional on the divestment of Lutosa’s branded retail business in the European Economic Area (EEA)

Brussels, 29-5-2013 — /europawire.eu/ — The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Lutosa of Belgium by McCain of Canada. Lutosa’s activities overlap with those of the global market leader McCain in the production and sale of processed potato products, in particular frozen French fries. The clearance is conditional on the divestment of Lutosa’s branded retail business in the European Economic Area (EEA). The Commission had concerns that the merger, as initially notified, would have reduced competition on the Belgian retail market for French fries and potato specialities. The commitments offered by the parties adequately address these concerns.

The Commission’s investigation showed that the transaction, as initially notified, risked reducing competition significantly in the Belgian retail market for branded frozen French fries and potato specialties. It would have eliminated the competitive constraint exerted on the market leader McCain by Lutosa, which relies on Belgian sourcing for its brand positioning and on a good price/quality relationship. Moreover, the merged entity would have large combined market shares, without sufficient competitive constraints from the one remaining competitor or from private label products.

In order to remove those concerns, McCain offered to divest the retail business operated under the “Lutosa” brand in the EEA to a suitable purchaser. The divestment includes an EEA-wide exclusive licence for the “Lutosa” brand in the retail sector, together with the necessary know-how and staff. It removes the overlap for branded potato products in the Belgian retail sector and is designed to allow the purchaser to operate a viable business in competition with McCain and other players.

The Commission therefore concluded that the transaction, as modified by these commitments, would not raise competition concerns anymore. The decision is conditional upon full compliance with the commitments.

Background

The Commission also investigated the markets for the production and commercialisation of processed potato products dedicated to the food service sector (restaurants, canteens, etc.) and the food industry sector. The Commission concluded that the proposed acquisition would not raise competition concerns in these markets, in particular because the merged entity will continue to face strong competition from international players present across the EEA, such as Aviko and Lambweston.

The transaction was notified to the Commission on 3 April 2013.

Companies and products

Headquartered in Toronto, Ontario, Canada, McCain is active globally in the production, processing and sale of frozen, chilled and dehydrated potato products, pizzas, appetizers, oven meals, juices and desserts. Lutosa is a group of internationally operating companies headquartered in Belgium, active in the food sector and especially in potato production and sales markets.

Merger control rules and procedures

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).

More information is available on the Commission’s competition website in the public case register under the case number M.6813.