GRANAROLO/CENTRALE DEL LATTE DI VICENZA
PRESS RELEASE
PRESS RELEASE
The Authority has prohibited Granarolo from acquiring Centrale del Latte di Vicenza
At its meeting on 24 May 2001, the Competition Authority prohibited the acquisition of Centrale del Latte di Vicenza by Granarolo, whose bid for the company had been accepted by the Vicenza city council following the public tendering procedure. For the Authority considered that, as notified, the acquisition was give Granarolo a joint dominant position with Parmalat on the Veneto fresh milk market, which would have the effect of restricting competition.
During the course of the investigation it emerged that on the Veneto fresh milk market there was very little competition between the companies currently operating there. The local producers were unable to compete sufficiently with Granarolo and Parmalat because when setting their pricing strategies they clearly followed the market decisions and policies of the two nationwide companies.
This acquisition would have substantially increased the level of concentration of the fresh milk market in Veneto, enabling Granarolo to acquire a market share similar in magnitude to Parmalat’s, giving the two companies an aggregate market share of around 60 percent.
The investigation revealed that Granarolo and Parmalat’s expansion strategy in recent years on the fresh milk market had mainly been pursued by making numerous acquisitions that had enabled both companies to achieve substantially the same nationwide dimensions, with outlets on many local fresh milk markets. Today, both companies produce in several factories and not only have a national brand-name but also numerous local brands.
Acquisitions by Granarolo and Parmalat have enabled these two companies to operate on numerous local markets which has encouraged them to establish economic ties and interdependence. From the point of view of competition law, the contact created between Granarolo and Parmalat on many distinct geographic markets is a strong disincentive for them to adopt measures to compete with one another on the market investigated here, which, as a result of the acquisition in question, would have created a duopoly.
All these circumstances, considered with the structural features of that particular market, would therefore have created conditions for a substantial convergence of interests between Granarolo and Parmalat, enabling both these nationwide companies to acquire a market position that would make it economically sensible and particularly realistic for them to tacitly adopt parallel policies for raising prices, to the detriment of consumers.
Rome, 6 June 2001