McCain’s Acquisition of Lutosa Approved – Subject to Conditions
The European Commission has cleared 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 has 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 transaction was referred to the Commission on 3 April 2013.
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.
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.
