EU probes Master Blenders, Mondelez tie-up
The European Commission on Monday said it had opened an in-depth antitrust probe into a proposed joint venture between leading Dutch coffee supplier Douwe Egberts Master Blenders 1753 and US giant Mondelez.
The two companies announced in May that they would team up to take on other giants in the coffee market, such as Nestle.
The deal would see Master Blenders pay $5.0 billion (3.5 billion euros) in cash to Mondelez for its coffee business, and give Mondelez, known for its Jacobs and Carte Noir brands, a 49-percent stake in the new player.
The company, to be called Jacobs Douwe Egberts (JDE), will be based in the Netherlands and is expected have annual sales of more than $7 billion.
The European Commission said it "has concerns that the proposed transaction may reduce competition for various coffee formats in Austria, France, Denmark and Latvia and for single-serve systems in multiple member states".
Master Blenders owns the popular single-serve Senseo brand, while Mondelez has Tassimo, which together represent two of Europe's top four players in that arena.
"This concentration of key local brands in the hands of one company increases the likelihood of price increases for retailers and ultimately for consumers," the Commission said in a statement.
It added that the two firms had offered commitments to address the Commission's concerns, but that these were deemed "insufficient".
"The Commission will now investigate in depth the proposed transaction in order to determine whether or not these initial concerns are confirmed," it said.
It has until May 6, 2015 to reach a decision.
© 2014 AFP