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09 August 2018
On 10 May 2018 the Competition Agency (FNE) issued a decision blocking Ideal's acquisition of Nutrabien.
Ideal is a subsidiary company of the Mexican Bimbo Group that focuses on pastries and baked goods. Nutrabien is controlled by Foods & CCU, which is part of the Chilean Group CCU and is dedicated to the production, distribution and sale of cakes, cookies and baked goods.
After the transaction was notified in July 2017, the FNE carried out an investigation which found that:
This is the first time that the FNE has blocked a concentration between companies since the new merger control system entered into force in June 2017.
The proposed concentration consisted of the 100% acquisition of shares in Nutrabien, as regulated by the Competition Statute (DL 211).
The FNE assessed that there would be an overlap of supply in the commercialisation of some mass consumption packaged products. Further, the concentration operation would generate an increase in the product market's concentration indexes.
It was determined that Nutrabien and Ideal are close competitors. The pressure to increase price indexes underlined that there were unilateral risks that could potentially affect the prices of specific products.
Further, there was no evidence that an entrant or incumbent would be able to adequately compete with the merged parties once the concentration had been finalised.
Conversely, the FNE considered that Nutrabien's acquisition was not Ideal's sole route to expand certain parts of its business and increase its productive capacity.
The FNE has given a clear sign to the market by blocking a concentration transaction for the first time and dismissing the efficiencies and mitigation measures raised by the parties, as the risks to competition were too great according to its guidelines.
The parties filed an appeal before the Competition Court on 25 May 2018. The decision is pending.
For further information on this topic please contact Andrés Rioseco at González & Rioseco Abogados by telephone (+56 228 400 400) or email (firstname.lastname@example.org). The González & Rioseco Abogados website can be accessed at www.gonzalezrioseco.cl.
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