Decision Nº M/13/036 from Competition and Consumer Protection Commission, 2014-04-30

• Jurisdiction: Ireland
• Parties: Glanbia Ingredients Ireland Limited,Wexford Creamery Limited
• Date: 30 April 2014
• Decision Number: M/13/036
• Status: Cleared (Phase 2)
• Court: Competition and Consumer Protection Commission (Ireland)
• Decision Date: 30 April 2014

1

DETERMINATION OF MERGER NOTIFICATION M/13/036 –

Glanbia / Wexford Creamery_________ __

Section 22 of the Competition Act 2002

Proposed acquisition by Glanbia Ingredients Ireland Limited of the

entire issued share capital of Wexford Creamery Limited from

Wexford Milk Producers Limited

Dated 30 April 2014

M/13/036 - Glanbia /Wexford Creamery

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TABLE OF CONTENTS

1.

Introduction ............................................................................... 1

The Notification ...................................................................................... 1

The Undertakings Involved ...................................................................... 1

Milk Supply Agreements .......................................................................... 3

Rationale............................................................................................... 5

The Procedure ....................................................................................... 5

Preliminary Investigation (Phase 1) .......................................................... 5

Full Investigation (Phase 2) ..................................................................... 7

2.

Background: Dairy Sector In Ireland ........................................ 10

Structure of Dairy Sector in the State ...................................................... 10

Liquid Milk ............................................................................................ 10

Manufacturing Milk ................................................................................ 11

Milk Procured Outside the State .............................................................. 11

Dairy Co-ops ........................................................................................ 11

Prices and Contracts .............................................................................. 12

3.

Relevant Product and Geographic Markets ................................ 15

Introduction ......................................................................................... 15

Relevant Product Markets ....................................................................... 15

Relevant Geographic Markets .................................................................. 16

Views of the Undertakings Involved ......................................................... 16

Views of the Authority ........................................................................... 18

4.

Competitive Assessment ............................. .............................. 20

Introduction ......................................................................................... 20

Competitive Effects ............................................................................... 20

Views of the Undertakings Involved ......................................................... 20

Views of the Authority ........................................................................... 22

Conclusion on Competitive Effects ........................................................... 27

5.

Ancillary Restraints .............................. ..................................... 28

Determination ................................................................................... 29

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M/13/036 – Glanbia/Wexford Creamery

1. INTRODUCTION

The Notification

1.1 On 12 December 2013, in accordance with section 18 of th e Competition

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

received a n otification of a proposed transaction whereby Glanbia

Ingredients Ireland Limited (“GIIL”) would acquire the entire issued

share capital of Wexford Creamery Limited (“Wexford C reamery”) from

Wexford Milk Producers Limited (“Wexford Producers”).

1.2 The proposed transaction would be implemented pursuant to a Share

Purchase Agreement (“SPA”) dated 19 November 2013 between Wexford

Milk Producers, Glanbia Co-operative Society Limited (“Glanbia Co-op”),

GIIL and Glanbia Plc.

1.3 The parties state that

“[W]e collectively refer to [Glanbia] Co-op, [Glanbia] Plc (and its

subsidiaries) and GIIL as “Glanbia” since, for the purposes o f

merger control, together they constitute a single economic

entity”.

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1.4 Consistent with th e view of the parti es, stated above, in this

determination, unless specifically stated otherwise, the name “Glanbia”

will be used when referring to any or all of Glanbia Co-op, Glanbia Plc or

GIIL.

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The Undertakings Involved

Acquirer – Glanbia

1.5 GIIL, established in l ate 2012, i s controlled by Glanbia Co-op which holds

60 per cent of its issued share capital. The remaining 40 percent

shareholding is held by Glanbia plc.

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1.6 Glanbia Co-op and Gl anbia Plc are co-located i n Kilkenny, County

Kilkenny, Ireland and GIIL is headquartered in Ballyragget, County

Kilkenny, Ireland.

1.7 Globally and within the State Glanbia is involved in various dairy product

sectors including liquid milk (i.e., milk for human consumption in liquid

form), cream,

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cheese,

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whey proteins, milk powders, sports nutrition

products and micronutrients. Glanbia has a physical presence i n 17

countries and i ts pro ducts a re d istributed in over 130 countries

worldwide with the large st markets being the US and continental Europe.

It also has a smaller scale presence in the Mid dle East, Asia Pacifi c and

Latin America.

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Notification page 2.

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See <http://www.glanbia.com>

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Glanbia Co-op’s shareholding in Glanbia Plc is approximately 40 per cent. Glanbia Co-op also

nominates the majority of Glanbia Plc’s board of directors. The remaining shares are held by

institutional and retail investors including Co-op members.

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This includes supplying Diageo plc, the manufacturer of Bailey’s Irish Cream.

5

This includes supplying the Irish Dairy Board for subsequent export to markets outside the State.