Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: EC approves joint venture between coffee manufacturers, (May 5, 2015)

By Edward L. Puzzo, J.D.

The European Commission has approved the proposed creation of a joint venture between DEMB and Mondelēz, two of the world's leading coffee manufacturers, the Commission announced today (IP/15/4915).

D.E. Master Blenders 1753 B.V. (DEMB) is an international coffee and tea company headquartered in The Netherlands. Mondelēz International Inc. (Mondelēz), which spun-off from the North American grocery operations of Kraft Foods in 2012, manufacturers coffee products as well as other beverages, cookies, chocolate, candy, cheese, and chewing gum.

The proposed joint venture (case number M.7292), operating under the name Jacobs Douwe Egberts (JDE), would be active in all coffee formats, including filter pads for Senseo single-serve coffee machines, T-discs for Tassimo single-serve coffee machines, and N-capsules for Nespresso single-serve coffee machines.

To address the Commission’s concerns that the joint venture might cause price increases for ground coffee and filter pads in the French, Danish, Latvian, and Austrian markets, Mondelēz will sell its Carte Noire business across the European Economic Area (EEA), while DEMB will sell its Merrild business across the EEA and license its Senseo brand in Austria.

To address the Commission’s concerns that the joint venture would eliminate competition between currently competing brands—L'Or and Carte Noire in France; Merrild and Gevalia in Denmark; Merrild and Jacobs in Latvia; and Senseo and Jacobs in Austria—Mondelēz will sell its Carte Noire business in France, DEMB will divest itself of its Merrild business in Denmark and Latvia, and the Senseo brand in the Austrian filter pads market will be licensed for five years for re-branding purposes.

As to the single-serve coffee machine market, the Commission determined that joint ownership of DEMB's Senseo and Mondelēz's Tassimo single-serve machines would be permissible because of competition from its strong rival Nestlé, which owns the other two single-serve systems: Dolce Gusto and Nespresso.

Toll motorways. Separately, the Commission approved joint control (case number M.7512) by Ardian Group of France and Abertis Group of Spain over Spanish toll motorway concession operator Túnels de Barcelona I Cadí, Concessionària de la Generalitat de Catalunya, S.A. (Túnels).

Túnels is the holder of a 25-year concession to operate two sets of tunnels and access roads connecting Barcelona with the Barcelona Outer Ring Road and with Toulouse through the Pyrenees. As Abertis Group is currently the sole owner of Túnels, the Commission concluded that the proposed acquisition would raise no competition concerns given its limited impact on the market structure.

Banking. The Commission also cleared the acquisition of Banco BPI by CaixaBank (case number M.7570). Banco BPI, S.A. is active in the banking and insurance sector, mainly in Portugal. CaixaBank, S.A. is an integrated Spanish financial group with a banking business, insurance, and investments activity, listed on several stock exchanges. The Commission concluded that the proposed acquisition would raise no competition concerns because the companies' combined market shares are very low.

Insurance. The Commission approved the acquisition of Brit PLC by Fairfax Financial Holdings Limited (case number M.7577). Brit of the U.K. and Fairfax of Canada both provide specialty non-life insurance and reinsurance globally. The Commission concluded that the proposed acquisition would raise no competition concerns, in particular because the companies' combined market shares would remain small.

Railways. Finally, the Commission cleared the acquisition of sole control of AnsaldoBreda S.p.A. and Ansaldo STS S.p.A., both of Italy, by Japanese conglomerate group Hitachi Ltd. (case number M.7581). AnsaldoBreda manufactures railway and mass transit vehicles (rolling stock), while Ansaldo STS produces signaling and integrated transport systems for passenger traffic and freight operation. The Commission concluded that the proposed transaction would raise no competition concerns as there are no or only minor overlaps between the companies' activities in the European Economic Area (EEA).

Companies: D.E. Master Blenders 1753 B.V.; Mondelēz International Inc.; Ardian Group; Abertis Group; Túnels de Barcelona I Cadí, Concessionària de la Generalitat de Catalunya, S.A.; Banco BPI, S.A; CaixaBank, S.A.; Brit PLC; Fairfax Financial Holdings Limited; AnsaldoBreda S.p.A.; Ansaldo STS S.p.A.; Hitachi Ltd.

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