Brussels, 31/07/2001 (Agence Europe) - Last Friday, the European Commission gave the green light to the acquisition, by the Swiss company Nestlé, of Ralston Purina, an American producer of pet food, on condition for respecting certain conditions concerning Spain, Italy and Greece.
The operation consists of the acquisition by Nestlé of the full control of Ralston Purina. The traditional activities of Nestlé are the production, marketing and sale of a wide rang of foodstuffs, including pet food. In 1998, Nestlé widened its activities in this last sector buying Spillers Pet Food from Dalgety Plc. The main activities of Ralston Purina are the production and sale of pet food. This producer is mainly present in the United States and Canada and in Europe it exercises its activities through the intermediary of subsidiaries, except in Spain where it is present through Gallina Blanca Purina S.A., in Barcelona, a joint venture that its shares equally with the Spanish company Agrolimen S.A.
The Commission investigation confirmed that the markets for pet foods (dogs, cats, dry food, and wet food) always have a national dimension, due to the considerable differences in the consumption habits, prices, marketing strategies, etc. The investigation emphasised problems of competition on three national markets. The Commission also noted that, following the operation, Nestlé would hold a dominant position in Spain and that it would have eliminated its main competitors on the market for dried foods for cats and dogs, as well as cat treats. It also noted that the acquisition would pose problems of competitions on the Italian and Greek market for dried cat food.
In order to remedy these problems, the parties undertook to make the overlap in Spain disappear, either by selling the 50% stake that Ralston Purina holds in Gallina Blanca Purina, or by selling the production facility Nestlé owns in Spain and by granting exclusive licences for a three-year period for the "Friskies" brand. The same approach was adopted for Italy and Greece, where the exclusive licence for a three-year period will be granted for the entire "Chow" brand. Moreover, all the intellectual property rights linked to the activities concerned will also be sold. The parties also undertake, in each of these three countries, not to reduce or promote the brands that are the object of licences for close to five years after the deadline of the period covered by the licences. The future buyers will thus enjoy, in each country, sufficient time to rename the products bought during this period and to position themselves as competitors in the market.
Taking into account the specificities of the markets concerned, the Commission reached the conclusion that the solution proposed, including the fact of renaming the products, is feasible and goes in the interest of consumers, since it permits them to avoid that the ownership of the pet food brands concerned are fragmented in a permanent manner between the various parts of the Community. As a result it concluded that the undertakings made by the parties are of a nature to eliminate the problems of competition revealed by the investigation.
The Commission examined the impact of the operation in question only in the European Union, given that pet food does not enter into the scope of application of the agreement on the European Economic Area. The Federal Trade Commission in the United States is also examining this case.