Competition Council authorizes, on conditions, the takeover of Covalact and Lactate Harghita by Lactalis

The Competition Council has authorized, on conditions, the transaction through which the Lactalis group takes over Covalact SA and Lactate Harghita SA, the competition authority says in a statement released on Tuesday.

“Following the analysis, the Competition Council has found that the transaction could lead to a strengthening of the Lactalis group’s position on the market for butter production and marketing at national level, with the effect of cutting the consumers’ options. In this situation, it would have been possible for the transaction to lead higher prices for butter. The Lactalis Group has therefore committed itself to cession the ‘La Dorna’ butter mark, for a certain period of time, to a company with relevant industrial competence, independent of the Lactalis group. The company must operate re-branding, so it will sell butter under another name,” the release reads.

The Lactalis Group will also make every effort to maintain the economic viability and competitiveness of the business for cession and will be required to provide the Competition Council with information on the companies that want to take over the butter brand and obtain the prior agreement of the competition authority.

The Competition Council’s analysis has led to the conclusion that, as a result of the commitments made by the parties involved, the achievement of the economic concentration no longer significantly impedes effective competition, in particular as a result of creating or strengthening a dominant position on the relevant markets.

Lactalis bought in December 2016 the Romanian dairy producer Covalact, one of the ten largest players on the local market by turnover, for EUR 40 million. The acquisition was signed in mid December, the seller being assisted in the transaction by Schoenherr lawyers and the buyer, by Leroy & Associates law firm.

It’s the third important step that Lactalis makes in Romania after the group bought La Dorna brand from Jean Valvis in 2008, in a deal said to be worth EUR 80-100 million.