PARMALAT
PRESS RELEASE
PRESS RELEASE
The Competition Authority has found Parmalat in breach with respect of the sale of Newlat and the acquisition of Carnini, and has commenced two new investigations to appraise the conditions of competition on the relevant markets
At its meeting on 27 January 2005, the Competition Authority resolved to close the investigation pursuant to section 19(1) of the Competition Act (law 287/90) into Parmalat Spa for its failure to comply with the resolution adopted on 27 July 1999 under which the Authority made the acquisition of Eurolat conditional upon the disposal of a number of brands (Giglio, Polenghi, Matese, Torre in Pietra, Calabria Latte and Sole) and production plants taken over by the Newlat S.r.l. company.
The investigation confirmed that Parmalat S.p.A. had failed to dispose of the Newlat S.r.l. company. For even without considering the formal acquisition of Newlat by various nominee companies (Nulait, ECM, BHC, and subsequently BDIH), Parmalat had, in reality, retained control of Newlat through companies belonging to its own group. This reconstruction is corroborated by further evidence, such as the direct links between these companies and the Parmalat group, failure to pay up the equity capital of Newlat, and the total economic dependency of Newlat on Parmalat.
Applying the provisions of section 19(1) of the Competition Act, the Authority therefore imposed a fine on Parmalat which, in cases of this kind, must be not lower than the statutory minimum of 1% of turnover. In the instant case, in view of the particularly serious nature of the breach, and cosidering the present state of the Parmalat group, a fine was imposed in the statutory minimum amount of EUR 11,180,718.93.
After concluding the investigation, on 27 January 2005 the Authority resolved to start another investigation into the Parmalat S.p.A. company pursuant to section 18(3) of the Competition Act, to ascertain whether any distortion created by the breach by Parmalat S.p.A. of the 27 July 1999 order made it necessary to order further measures to restore real competitive conditions on the markets affected by the Parmalat/Eurolat merger.
On the same date, the Authority also concluded the proceeding pursuant to section 19 (2) of the Competition Act against Parmalat S.p.A. for failure to comply with the obligation to submit prior notification of the acquisition of Carnini S.p.A., pursuant to section 16 (1) of the Competition Act. For even though Parmalat S.p.A., in the course of 2001, had formally withdrawn its notification of the Carnini acquisition, it had nevertheless proceeded to acquire control of the company through purely nominee companies (BHC), without submitting any notification whatsoever. This reconstruction has also been confirmed, among other things, by the fact that Carnini's share capital was paid using Parmalat funds, and intercompany agreements had been concluded, conditioning the management of Carnini to the benefit of Parmalat.
For this breach, Parmalat was fined a token amount of EUR 1,000.
Having completed his proceeding, the Authority also resolved to institute another investigation pursuant to section 16(4) of the Competition Act against Parmalat S.p.A. and Carnini S.p.A., to see whether the operation carried out by Parmalat S.p.A. and Carnini S.p.A. would create or strengthen a joint dominant position on the part of Parmalat S.p.A. and Granarolo S.p.A. on the fresh milk market in the Lombardy Region.
Rome, 3 February 2005