Competition Authority Notification - Bewleys Manufacturing Ltd & Butlers Irish Confectionery/Others

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COMPETITION AUTHORITY

Decision No. 551

Competition Authority Decision of 27 May 1999 relating to a proceeding under Section 4 of the Competition Act, 1991

Notification No. CA/915/92E: Bewleys Manufacturing Ltd & Butlers Irish Confectionery/Others

Abstract:

Notification under section 4 of Competition Act 1991 – Share purchase agreement between parties – Bewleys acquired minority shareholding in Butlers with view to establishing joint venture – New manufacturing company – Sole right to manufacture boxed confectionery - Boxed chocolates sector - Confectionery market highly competitive – Necessary for parties to rationalise their operations – Survival in market – Object of agreement - Joint use of production and distribution facilities.

Introduction

1 Notification was made by Bewleys Manufacturing Ltd, Butlers Irish Confectionery Ltd, and others [Chez Nous Ltd, Sorenson family, and Bewley’s Cafes Ltd] on 30th September 1992 with a request for a certificate under Section 4(4) of the Competition Act, 1991 or, in the event of a refusal by the Competition Authority to grant a certificate, a licence under Section 4(2) in respect of a joint venture agreement.

1. (a) The Subject of the Notification

   2. The Notification concerns a share purchase agreement between Bewleys Manufacturing Limited and Butlers Irish Confectionery Ltd. Bewleys Manufacturing Limited acquired a minority shareholding in Butlers Irish Confectionery Ltd with a view to establishing a joint venture, a manufacturing company, to be named Irish Chocolate Company Limited, for the production of boxed confectionery products sold under the Bewley’s and Butlers brand names.

2. (b) The Parties Involved

   3. Bewleys Manufacturing Limited is a wholly owned subsidiary of Campbell Bewley Group Limited, whose registered offices are at 11/12 Westmoreland Street, Dublin 2. The Campbell Bewley Group Limited is engaged in several different businesses: (a) the business of contract catering; (b) retail shops and cafes; (c) wholesale supply of coffee, tea and speciality brands and confectionery.

   4. Chez Nous Limited, with registered offices at Unit5,IDA Enterprise Centre, Pearse Street, Dublin 2 is the parent company of Butler’s Irish Confectionery Limited who also have their registered offices at IDA Enterprise Centre (Unit 27), Pearse Street, Dublin 2. Butler’s Irish Confectionery Limited retail hand-made Irish chocolates. The Irish Chocolate Company Ltd is a manufacturing company in which Butler’s Irish Confectionery Limited and Bewleys Manufacturing Limited were shareholders. However since 1992, the minority shareholding of Bewley’s Manufacturing Limited has been transferred to Campbell Bewley Group Limited. The latter now have a shareholding of 28.5%; Chez Nous Limited, parent company of Butler’s Irish Confectionery Limited, have the remaining 71.5% shareholding.

3. (c) The Products and the Markets

   5. The notifying parties claimed that the relevant product market was the confectionery market and the relevant geographical market was the State, with the product available throughout the State. All the different products within the relevant market are substitutable for each other. The notifying parties claimed that the confectionery market was highly competitive; in addition to having well known multi-national companies such as Cadbury, Rowntrees, Suchard, Leonidas, Mars, Gateaux and Mr. Kippling, there are also small confectioners who compete locally throughout the State.

   6. The parties to the agreement operate predominantly in the boxed chocolates sector, which is a small part of the chocolate sector. The notifying parties claimed that it is easy for a new supplier to enter the market and that the outlay required for start-up is not excessive. However, to compete with well-known brands requires substantial investment.

   7. Bewleys via the Irish Chocolate Company Limited estimates that it has a...