Tetra takeover of cheddaring firm escapes Competition Commission

By staff reporter

- Last updated on GMT

Related tags: Oft, Mergers and acquisitions

Tetra Laval's anticipated acquisition of the cheese-making
equipment division of a UK-based firm will not be referred to the
Competition Commission (CC) after the Office of Fair Trading (OFT)
accepted proposals addressing competition concerns.

The OFT has a duty to make a reference to the CC if the OFT believes that a relevant merger situation is or maybe created, and that situation has or will lead to a substantial lessening of competition. This can delay acquisitions and in some instances lead to a merger or acquisition being prohibited.

The move to obtain a section of Carlisle Process Systems from Carlisle Companies had raised concerns as the OFT had considered the merger of two leading competitors in the supply of vats, cheddaring machines and cheese towers to UK customers would reduce competition and innovation, resulting in higher prices and lower service levels.

To prevent a referral, the parties have offered to grant an exclusive irrevocable EEA-wide licence of intellectual property rights relating to cheese-making equipment sold under Carlisle's 'Wincanton' brand.

The OFT, in a novel decision, have agreed rights to manufacturing equipment and parts are to be sold to an up-front buyer, Moody, post completion of the acquisition. For the sale of intellectual property rights to be a viable proposal to maintain effective competition within the industry, the OFT examined Moody's business case and capabilities and were satisfied.

Carlisle UK managing director, Charles Todd, told FoodProductionDaily.com: "Acceptance of the proposals now allows the forward. Customers will be offered a better range choice including complete systems through the combining of expertise and experience."

Vincent Smith, Senior Director for Competition at the OFT said:

"This case demonstrates the OFT's flexibility on merger remedies when parties show constructive engagement with the OFT on this issue at an early stage, as they did here. Accordingly, the need for a Competition Commission Investigation was avoided, while customers and consumers will be protected from the adverse effects of the merger."

The related parties have not comfirmed when the acquistion will commence.

Related topics: Manufacturers, Consolidation

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