Decision Nº M/11/004 from Competition and Consumer Protection Commission, 2011-04-01

• Jurisdiction: Ireland
• Decision Number: M/11/004
• Decision Date: 01 April 2011
• Date: 01 April 2011
• Parties: Golden Vale Dairies Limited,Dawn Dairies Limited,Glanbia Foods Ireland Limited
• Court: Commissioner for Environmental Information

Merger Notification No. M/11/004 – Glanbia/Dawn Dairies and Golden Vale Dairies

DETERMINATION OF MERGER NOTIFICATION M/11/004 -

Glanbia/Dawn Dairies and Golden Vale Dairies

Section 21 of the Competition Act 2002

Proposed acquisition by Glanbia Foods Ireland Limited of the

Limerick-based liquid milk business of Kerry Grou p plc

Dated 1 April 2011

Introduction

1. On 19 January 2011, in accordance with section 18(3) of the

Competition Act 2002 (the “Act”), the Competition Authority (the

“Authority”) received a voluntary notification of a proposed acqui sition

by Glanbia Foods Ireland Limited (“Glanbia”) of the Limerick-based

liquid milk business of Kerry Group pl c (“Kerry”). The Kerry Limerick-

based liquid milk business to be acquired (hereinafter the “Target

Business”) comprises primarily the liquid milk business carried on by

two whol ly-owned su bsidiaries of Kerry: Dawn Dairies Limited (“Dawn

Dairies”) and Golden Vale Dairies Limited (“Golden Vale Dairies”) and

certain other tangible and intangible assets described furthe r below.

2. On 16 February 2011, the Authority served two Requirements for

Further Information on Glan bia and Kerry pursuant to section 20(2) of

the Act. This automatically suspended the procedure for the

Authority’s Phase 1 assessment.

3. Upon receipt of th e responses to the Req uirements for Further

Information, the “appropriate date” (as defined i n section 19(6) of the

Act) became 4 March 2011.

1

4. The notification contains an economic report prepared by Dr. Francis

O’Toole on behalf of the parties (hereinafter, th is report will be referred

to as the “Economic Report”).

2

The Economic Report provides the

views of the parties on the markets th at are likely to be affected by the

proposed transaction.

3

Th e Economic Report also descri bes the

competitive characteristics of each market and concludes that the

proposed transaction will not lead to a substantial lessening in

competition in any ma rket in the State. A more detail ed discussion of

the views expressed in the Economic Report is provided b elow.

Proposed Transaction

1

The “appropriate date” is the date from which the time limits for making both Phase 1 and

Phase 2 determinations begin to run.

2

Dr. Francis O’Toole is a senior lecturer in the Department of Economics in Trinity College,

Dublin.

3

The Authority sought clarification from the parties during the investigation concerning some of

the information provided in the Economic Report. The Authority received two submissions from

the parties dated 7 March 2011 and 14 March 2011, respectively, which contained responses from

Dr. O’Toole to the Authority’s questions. For ease of reference, the term "Economic Report" will

be deemed to include the responses provided in both submissions by Dr. O’Toole.

Merger Notification No. M/11/004 – Glanbia/Dawn Dairies and Golden Vale Dairies 2

5. As a result of the proposed transaction, Glanbi a will acquire:

a) the Target Business;

b) certain tangible assets from Kerry, including the liquid milk

processing machinery of th e Target Business but excluding the

site and buildings of the Target Business (which are being

retained by Kerry post-acquisition);

c) an exclusive trademark licence to use the Dawn, Golden Vale,

Hi & Lo, and Ashgrove brands for a period of […] years for th e

distribution and sale of mil k, cream and certai n non-milk and

cream products in certain parts of the S tate. Annex A below

contains a map of the State indi cating the areas where Glanbia

is allowed under the trademark licence to sell the products

concerned under the Dawn, Golden Vale, Hi & Lo, an d Ashgrove

brands.

6. Glanbia will have the right to sell own-label liquid milk and cream

purchased from K erry's Li merick-based suppliers without restriction in

the State but its right to sell under the Dawn, Golden Vale, Hi & Lo,

and Ashgrove brands will be subject to the geographical restrictions

outlined above. Glanb ia remains free, howev er, to sell liquid milk and

cream products under any of its other bra nds or retailer brands

anywhere in the State.

7. In addition to the Sale Agreement between the parties, the following

additional contracts are to be entered into between th e parties:

 A Transitional Services Agreement, whereby Kerry agrees to

provide certain services to Glanbia for up to […] after

completion in order to ensure a smooth transfer of the liquid

milk business from Kerry to Glanbia;

 A Mil k Suppl y Agreeme nt wher eby Kerry agree s to supply milk

to Glanbia. This agreement is for up to […] years with each

party having a ri ght to terminate by […] year’s notice to expire

on the […] of the date the agreement commences; and,

 A Trademark Licence whereby Kerry grants Glanbia an exclusive

licence to use the Daw n, Golden Vale, Hi & Lo and Ashgrove

Farms brands for a period of […] years in the specified

geographic territory

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after completion.

8. Post-transaction, Kerry will continue to be active in the liquid milk

business in the State as it will continue to own the right to u se the

Dawn, Golden Val e, Hi & Lo, and Ashgrove brands in county Kerry and

parts of counties Cork and Limerick. Kerry will also retain ownership of

a liquid milk production facility located in Killa rney, Co. Kerry.

9. The trademark rights in areas not included in the Glanbia li cence

referred to in paragraph 5(c) abov e have been licensed by Kerry to

other li censees. Thus, Kerry’s Galway-based liquid milk business was

acquired by Arrabawn Co-operative (“Arrab awn”) in April 2010.

Arrabawn owns the exclusive trademark licence for the use of the […]

4

See paragraph 5 above.