Technical staff at Brazil’s antitrust watchdog, the Administrative Council for Economic Defense (CADE), has advised the regulator to block the sale of DPA Brazil from Nestlé and Fonterra to Lactalis.
Fonterra and Nestlé announced that they had agreed to sell their Dairy Partners Americas Brazil joint venture to Lactalis for BRL 700 million (approx. $133 million), at the end of 2022.
CADE’s court will conduct a broader review of the transaction and vote on whether to approve the sale or not.
The CADE technical staff analysed the effects of the combination of DPA Brasil and Lactalis’ activities in the national markets, which include fermented milk, yogurt and the capture of milk in Brazil’s states of São Paulo, Pernambuco, Paraná and Minas Gerais.
CADE said its staff had raised concerns regarding “likely horizontal effects on the dairy chilled products markets, mainly fermented milk, petit suisse and dairy desserts”.
A “reduced number of rival companies in those markets nationwide” was identified, with the team noting that competitors would have “low capacity to challenge the market power resulting from the transaction”.
The conclusions also pointed to a small number of rival companies – mainly at the national level –and a low capacity of competitors to challenge the market power resulting from the operation in the milk markets fermented, petit suisse and dairy desserts.
CADE did not, however, identify any competitive risks resulting from the transaction for the yogurt, cream cheese and milk collection markets.
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