AGCM

The merger between the main and second player in the market for frozen breakfast bakery products would have led to the creation of a dominant position. The Authority imposed measures to ensure competitive pressure on the post-merger entity and to improve competitor’s access to distribution outlets

The Italian Competition Authority conditionally authorised the merger consisting in the acquisition by Frozen Investment S.à.r.l. and Sammontana Finanziaria S.r.l. of joint control of Sammontana S.p.A. and Forno d’Asolo S.p.A.

The transaction involves the aggregation of the two most important operators active in the frozen bakery products sector (which includes breakfast bakery products, savoury snacks, pastry and bakery products) in the food service channel (bars, hotels, restaurants and bakery departments within retail outlets). Both Sammontana S.p.A. and Forno d’Asolo S.p.A. are active with well-known brands such as Tre Marie, Il Pasticcere, Mongelo (Sammontana S.p.A.) and Bindi, Lizzi and Forno d’Asolo (Forno d’Asolo S.p.A.).

The survey carried out by the Authority established the existence of a national market for frozen breakfast bakery products in the food service channel, as distinct from both fresh products and other types of bakery products (pastry, bakery, savoury snacks). The survey also showed that, in this market, the merger can produce significant anti-competitive effects, since it removes the competitive restriction between the two main players. Indeed, Sammontana and Forno d’Asolo have far superior production and distribution characteristics compared to their competitors, which are much smaller in size and have a limited capacity to react. Specifically, following the merger, the two companies would have had a very high market share (between 45% and 50%) such as to ensure their leadership in domestic sales of frozen bakery products in Italy and more than four times higher than the first competitor.

Analysis also showed that the transaction would have led to significant incentives to increase prices for frozen breakfast products in the absence of sufficiently high competitive pressure from other companies. In addition, Sammontana and Forno d’Asolo have at their disposal a distribution capacity, in terms of logistical networks and sales agents, which is highly articulated and based on direct branches or exclusive dealerships, thus capable of creating a competitive obstacle after the merger.

Therefore, in authorising the transaction, the Authority imposed certain structural and behavioural measures on the parties to overcome the competition concerns raised by the investigation.

The measures consist in the divestiture, in favour of a competing operator, of a company already independently active in the market, with its own production facilities, distribution capacity and established brands, and in the commitment not to purchase companies active in the distribution of bakery products in Italy, nor companies active in the production and marketing of breakfast bakery products in Italy with a significant turnover. Furthermore, the two companies will assign the current concession contracts between Forno d’Asolo S.p.A. and Froneri Italy S.r.l./Nestlè Italiana S.p.A. for the distribution of ice cream and bakery products for breakfast in certain Italian provinces, with the possibility for the successor company to use Forno d’Asolo’s agents for the sale of the products covered by the concession (frozen bakery products and ice cream) without any obstacles.

In addition, in Friuli Venezia Giulia, Trentino Alto Adige, Veneto, Tuscany, Sardinia, Sicily, Calabria and Basilicata (i.e. the areas where the gap between the parties’ sales network and those of their competitors in terms of distribution capacity is widest), the Authority imposed, for a period of five years extendable by another five years, measures to eliminate or not provide for exclusivity (de jure or de facto) for the sale of frozen breakfast bakery products with the parties’ agents and logistics operators. This allows competitors to use this distribution capacity for frozen breakfast products (and other bakery products, if sold together) to counter the increased market power of the companies involved. In the event of space saturation, and for the benefit of competitors, provision is also made for the freeing up of space at the premises of logistic operators.

The objective of all measures is to ensure that the merged entity is subject to appropriate competitive pressure by divesting part of the business and improving distribution outlets for competitors.

Rome, 26 July 2024