Canada-based frozen food company McCain Foods has received approval from the European Commission (EC) to acquire the potato division of Belgian frozen vegetables producer PinguinLutosa Food for €225m
The approval is conditional upon full compliance with the commitments including the divestment of Lutosa's branded retail business in the European Economic Area (EEA) in order to overcome anti-trust issues.
The investigation by the EC, initially, showed that the merger would have reduced competition on the Belgian retail market for branded frozen French fries and potato specialities. The merger would have eliminated the competitive constraint on McCain by Lutosa, which is dependent on Belgian sourcing for its brand positioning.
In addition, the combined entity would have huge market shares, without competitive constraints from the one remaining competitor or from private label products, according to the EC.
In order to these issues, McCain has agreed to divest the retail business operated under the 'Lutosa' brand in the EEA. The sale includes an EEA-wide exclusive license for the 'Lutosa' brand in the retail sector, which eliminates the overlap for branded potato products in the Belgian retail sector.
It is designed to allow the purchaser to operate a viable business in competition with McCain and other players in the segment.
The Commission concluded that the transaction as modified by these commitments would not have competition concerns.
McCain Foods has entered into an agreement to acquire the potato unit of Belgian frozen vegetables producer PinguinLutosa Food in October 2012.
The acquisition is part of McCain Foods' strategy to strengthen its core potato business in Europe and will include Lutosa's frozen, chilled and dehydrated potato product operations such as production, marketing and distribution, as well as the Lutosa brand.
