Dairy giants seek approval

Two of Europe's leading dairy companies are currently negotiating takeover bids with national competition authorities. But while Nestlé​'s long-delayed acquisition of Dreyer's could finally get the green light in the US nest week, Arla Foods​ attempt to merge with the UK's Express Dairies will need to be approved by the British authorities.

Although the Federal Trade Commission is yet to give a final ruling on the Nestlé/Dreyer's deal - which it has already blocked once - the Los Angeles Times​ newspaper reported this week that a deal which satisfied the regulators had finally been reached.

According to the paper, the new deal is not dissimilar to that put forward by the two companies in March in an unsuccessful bid to stave off censure by the FTC. As with the March agreement, Nestlé and Dreyer's will sell the super premium ice cream brands Dreamery, Whole Fruit sorbet and Godiva to the CoolBrands International company, along with the distribution rights in eight key US markets.

What is different this time, according to the newspaper report, is the condition that Nestlé also dissolve Dreyer's joint venture with Mars.

The FTC could give the green light as soon as Monday next week (16 June), the paper said.

However, approval is still some way away for Scandinavian dairy group Arla Foods' bid to merge with UK counterpart Express Dairies after the European Commission agreed to a request from the British competition authorities to refer parts of the deal back to them.

Although the Commission has given the all clear for the deal in the rest of the EU and for other product sectors, it agreed with the UK Office of Fair Trading that the specific impact of the deal on the British market for processed fresh milk and fresh cream should be assessed by the national authorities.

With Arla and Express being two of the top four dairy product suppliers in the UK, the British authorities were concerned that a merger of the two would have a specific impact on the markets for the procurement of raw milk, the supply of fresh processed milk and the supply of fresh potted cream. The OFT said it also had concerns over competition questions in the market for bottled milk in some parts of the UK.

While the European Commission agreed to the OFT's requests in the matter of fresh milk, fresh non-bulk cream and bottled milk, it did not see any particular problems concerning the procurement of raw milk, and gave its approval to the deal in this area.

The OFT said it would now undertake a detailed of the impact of the merger on the supply in the UK of fresh processed milk and fresh non-bulk cream, although it did not say how long such an investigation was likely to take.

Neither Arla nor Express Dairies has as yet commented on the decision to refer the deal to the OFT.