EUROPEAN COMMISSION DG Competition

Only the English text is available and authentic.

REGULATION (EC) No 139/2004 MERGER PROCEDURE

Article 6(1)(b) NON-OPPOSITION Date: 05/07/2024

In electronic form on the EUR-Lex website under document number 32024M11407

EUROPEAN COMMISSION

Brussels, 5.7.2024 C(2024) 4924 final

PUBLIC VERSION

In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004 concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus […]. Where possible the information omitted has been replaced by ranges of figures or a general description.

DROSED Holding S.A. ZI Saint-Laurent 72300 Sablé-sur-Sarthe France

Dear Sir or Madam,

(1) On 31 May 2024, the European Commission received notification of a proposed concentration pursuant to Article 4 of the Merger Regulation by which DROSED Holding S.A. (‘DROSED’, Poland), ultimately controlled by LDC S.A. (‘LDC Group’, France) will acquire within the meaning of Article 3(1)(b) of the Merger Regulation sole control of the whole of Indykpol S.A. (‘Indykpol’ or the ‘Target’, Poland) (the ‘Transaction’) by way of purchase of shares. DROSED will be hereinafter referred to as the ‘Notifying Party’ and together with Indykpol as the ‘Parties’ or ‘Parties to the Transaction’.

1 OJ L 24, 29.1.2004, p. 1 (the ‘Merger Regulation’). With effect from 1 December 2009, the Treaty on the Functioning of the European Union (‘TFEU’) has introduced certain changes, such as the replacement of ‘Community’ by ‘Union’ and ‘common market’ by ‘internal market’. The terminology of the TFEU will be used throughout this decision.

2 OJ L 1, 3.1.1994, p. 3 (the ‘EEA Agreement’).

3 OJ C, C/2024/3711, 12.6.2024.

Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111

1. THE PARTIES

(2) DROSED is the parent company of the DROSED Group, which is active in the production of a range of poultry meats (chicken, ducks, geese and guinea fowls). The DROSED Group focuses on the development of ready-to-eat products and processed poultry meat products and its activities range from hatcheries and poultry slaughtering to the supply and production of fresh and processed poultry meat. The DROSED Group mostly sells its production on the Polish market and exports the remaining part to different EU Member States and to certain countries outside of the EU. The DROSED Group belongs to the LDC Group, headquartered in France, which is primarily specialising in the marketing of live poultry, slaughtering, cutting and marketing of poultry meat, processed poultry products and delicatessen products.

(3) Indykpol is a Polish group of poultry companies specializing in the breeding and fattening of turkeys as well as in the production and sale of turkey meat and turkey meat products (sausages, cured meats and other processed meats). It offers its products mainly in Poland and is also an exporter of poultry meat and processed poultry meat products.

2. THE OPERATION

(4) On 7 November 2023, DROSED and the LDC Group concluded a Share Purchase Agreement (‘SPA’) with Rolmex S.A., current sole shareholder of Indykpol, pursuant to which DROSED acquired 100% of the shares of Indykpol. After completion, DROSED will hold 100% of the share capital of the Target and will be entitled to exercise 100% of the votes at its General Shareholders’ meeting. Hence, the Transaction consists in the acquisition of sole control by DROSED over Indykpol and constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

3. UNION DIMENSION

(5) The undertakings concerned have a combined aggregate worldwide turnover of more than EUR 5 000 million (LDC S.A.: EUR 5 835 million in 2022, Target: EUR 278.8 million in 2022). Each of them has an EU-wide turnover in excess of EUR 250 million (LDC S.A.: EUR […] in 2022; Target: EUR […] in 2022), but none of them achieves more than two-thirds of its aggregate EU-wide turnover within one and the same Member State.

(6) The notified operation therefore has Union dimension within the meaning of Article 1(2) of the Merger Regulation.

Turnover calculated in accordance with Article 5 of the Merger Regulation. Pursuant to point 169 of the Commission’s Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (OJ C 95, 16.4.2008, p. 1.), the Target’s turnover has been calculated on the basis of the accounts which relate to the closest financial year to the date of the transaction and which are audited under the standards applicable to the undertaking in question and compulsory for the relevant financial year.

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5

4. COMPETITIVE ASSESSMENT

4.1. Introduction

(7) The activities of the Parties horizontally overlap in the supply of processed poultry meat in general and, more specifically, in the supply of processed poultry cooked sausages.

(8) DROSED is active, mainly in Poland, in the supply and wholesale of several processed poultry meat products from chicken, duck, geese, guinea fowl, as well as the production of ready-to-eat products, such as cooked sausages.

(9) Indykpol is active in the supply and wholesale of processed turkey meat products, including cooked sausages, in Poland.

4.2. Relevant markets

4.2.1. Supply of processed poultry meat

4.2.1.1. Product market

4.2.1.1.1. Notifying Party’s views

(10) According to the Notifying Party, given the specificities of the Polish market, the market for the supply of processed poultry meat to retail in Poland does not require any segmentation, including by poultry species, type of retail sales channel or between branded and private/white label, as it appears that consumers buy both without making a distinction, due in part to their comparable quality. Particularly concerning processed poultry cooked sausages, the Parties in addition also consider that all poultry sausages should be included in the same market.

4.2.1.1.2. Commission’s and National Competition Authorities’ precedents

(11) In past cases, the Commission has defined a separate market for poultry meat products differentiated from other animal products such as pork or beef. The Commission has also envisaged in its past decisions to further distinguish separate markets for (i) chicken meat, (ii) turkey meat and (iii) boneless chicken breast meat, although ultimately left this question open.

(12) The Polish Competition Authority on the other hand considered that the competitive assessment of numerous transactions between poultry meat processors in Poland may be based on a basic distinction between the markets for fresh poultry meat and processed poultry meat without the need of a further sub-segmentation. For its part, the French Competition Authority has considered that the market for the sale of fresh poultry meat can be segmented according to the different species,

6 See paragraph 205 of the Form CO.

7 See paragraph 358 of the Form CO.

8 See paragraph 180 of the Form CO.

9 See paragraphs 422, 439, 444 or 448 of the Form CO.

10 Case M.1262 - CEBECO/PLUKON, para. 6.

11 Case M.5322 – Marfrig/OSI Group Companies, para. 13.

12 President of UOKiK’s Decisions: DOK-101/04 dated 11 October 2004, page 4; RBG-7/2005 dated 15 February 2005, page 3; Decision DKK 5/2015 dated 13 January 2015 (short form decision issued to the Notifying Party, where these market definitions were accepted).

especially considering differences in prices and taste of consumers. As a result, turkey meat, chicken meat and guinea fowl meat were distinguished as separate markets. Within the market for poultry meat products, the Commission has also considered that the production and supply of fresh poultry meat (i.e., either bulk or cut to pieces and packed, without further additions and ingredients), on the one hand, and processed poultry meat, on the other hand, constitute distinct markets. Within processed poultry meat, the Commission considered that this market could be further segmented between raw cured products, canned meat, ready prepared dishes, cooked sausages, pâtés and pies and processed meat for cold consumption but ultimately left the market definition open. The French Competition Authority also considered, while leaving the question open, the existence of a market for breaded poultry meat products (nuggets, cordons bleus, etc.).

(13) Moreover, the French Competition Authority considered within a market for the production and supply of processed poultry meat a further segmentation between the sale of fresh processed poultry products and the sale of frozen processed poultry products, on the grounds that they require an additional step of freezing and that fresh and frozen processed poultry meat products are not substitutable from the point of view of demand. The French Competition Authority has also considered a segmentation by sales channel between caterers, industrial processors, Modern Trade (i.e., hypermarkets, supermarkets, discounters and convenience stores, with some players also operating online stores) and Traditional Trade (i.e., artisan butchers, charcutiers and other specific stores) channels. Within the Modern Trade sales channel, the French Competition Authority also considered a further segmentation between branded products and private/white label and bulk.

(14) The previous decisional practice of the Polish Competition Authority on the other hand has considered that the market for the supply of poultry meat could be segmented only between fresh and processed poultry meat, without the need to further segment based on retail channel.

Décision 15-DCC-14 de l’Autorité française de la concurrence, Groupe LDC/Groupe Glon Sanders, 24 février 2015; Décision 21-DCC-65 de l’Autorité française de la concurrence, LDC Volaille/Ronsard, 14 avril 2021.

The Commission has defined processed meat products as “comprising meat from mammals or birds, containing external ingredients such as salt or spices, being raw, dried, smoked or cooked”. See M.1313 - Danish Crown/Vestjyske Slagterier, para. 43.

See Case M.3337 - Best Agrifund/Nordfleisch, paras. 40 and 42; M.3401, Danish Crown/Flagship Foods, para. 16.

Décision 10-DCC-119 de l’Autorité française de la concurrence, Terrena Maïsadour/Fermiers Landais Sovol Gastronome Distribution, 17 septembre 2010; Décision 15-DCC-14 de l’Autorité française de la concurrence, Groupe LDC/Groupe Glon Sanders, 24 février 2015; Décision 21-DCC-65 de l'Autorité française de la concurrence, LDC Volaille/Ronsard, 14 avril 2021).

Décision 15-DCC-14 de l’Autorité française de la concurrence, Groupe LDC/Groupe Glon Sanders, 24 février 2015; and Décision 16-DCC-33 de l’Autorité française de la concurrence, Groupe LDC/Groupe Agrial, 24 février 2016; Décision 21-DCC-65 de l’Autorité française de la concurrence, LDC Volaille/Ronsard, 14 avril 2021.

See Décision 21-DCC-65 de l’Autorité française de la concurrence, LDC Volaille/Ronsard, 14 avril 2021, para 28.

See Decisions by the President of the UOKiK’s in cases DOK-101/04 dated 11 October 2004, page 4; RBG-7/2005 dated 15 February 2005, page 3; and Decision DKK 5/2015 dated 13 January 2005.

4.2.1.1.3. The Commission’s assessment

4.2.1.1.3.1. Species of poultry product

(15) With regard to the species of poultry meat, the market investigation is inconclusive in relation to the different species of poultry products (i.e. chicken, turkey, geese or duck) and whether these might constitute separate markets. For instance, a customer of the Parties noted that ‘[d]ifferent types of poultry meat should be regarded as different categories of the market, mainly because they are produced separately’. A competitor of the Parties also seems to indicate that the different species of poultry meat used for the production of processed poultry products belong to separate markets, although they nevertheless exert competitive pressure on each other: ‘there is no strong competition between the market segments of the production different species of poultry meat. While all proteins compete with each other, competition is not close’.

(16) Concerning the different types of processed poultry products (i.e. raw cured products, canned meat, ready prepared dishes, cooked sausages, pâtés and pies, breaded products, and other), the market investigation confirmed that there seem to be separate markets for the various types of processed poultry products. A majority of market participants that expressed an opinion indicated that there are different commercial conditions (e.g. commercial terms, length of agreements, quantities, prices, etc.) that apply depending on the different types of processed poultry products. For instance, a competitor of the Parties notes that ‘[t]he terms and markups can vary. The more processed the products are, the higher the payment terms and margins for both our company and the production plants are likely to be’. Similarly, a customer submitted that ‘[q]uantities and prices of different product types are functions of consumer demand, thus they are subject to seasonal changes or trends in consumers’ taste’. Similarly, a customer of the Parties indicated that consumers looking for a specific product, e.g. chicken sausages, may not be willing to purchase a different type of product, e.g. chicken pâté, but they may be willing to purchase the same product from a different poultry species, e.g. turkey sausages. In particular, ‘the products in the category of processed meats are not interchangeable. If an item is not available, for example sausages, the consumer will switch within the poultry family and buy a product from a different species, but not from a different category, e.g. buy canned meat’.

4.2.1.1.3.2. Sales channel

(17) On the one hand, the market investigation indicated that a segmentation between the Modern and Traditional trade channels may not be warranted. The majority of competitors that expressed an opinion confirmed that they sell processed poultry meat to both the Modern and Traditional trade channels. The majority of customers also confirmed that producers of processed poultry meat in Poland sell to both channels. For instance, a customer noted that ‘they sell both in modern and traditional trade segments - by this, processed poultry meat producers can ensure wide distribution and accessibility of their products, catering to a broad spectrum of consumer preferences and shopping habits’. Several customers also confirmed that this applies to all species of poultry meat and type of poultry products. Another customer indicated that ‘there is a high competition between the modern trade segment (i.e. hypermarkets, supermarkets, discounters and convenience stores, with some players also operating online stores) and the traditional trade segment (i.e. artisan butchers, charcutiers and other specific stores). About 40% of the meat market is still run by traditional butchers. It is therefore necessary to regularly consult the prices of the traditional market’. Similarly, a competitor of the Parties notes that there are no differences in quality and types of products between both retail channels, although there might be differences in packaging: ‘there is no significant difference in the quality of the products offered in modern and traditional trade. Retailers and discounters are imitating the quality of traditional trade products in order to advance their position on the market. There are certain differences on the package for the modern retail channel while traditional food service customers require a larger packaging. As to the product itself, each customer has its own specifications but there are no big differences in the product per se’.

(18) On the other hand, market participants also indicated that there are certain differences between the Modern and Traditional trade channels, which relate to the quantity of the poultry products sold to each of them, certain commercial conditions, and pricing, hence pointing towards separate product markets. For example, a customer of the Parties noted that the ‘modern trade channel contracts larger quantities of goods and thus obtains better purchase prices’. Similarly, another retail customer stated that ‘the traditional channel sells in large packages, whereas the [modern] retail chains sell in small portions’. The same has been confirmed by the Parties’ competitors, as the majority of them confirmed that there are differences between the sale of processed poultry meat to the Traditional trade and the Modern trade. However, most competitors confirmed that the difference mainly lies in the commercial conditions and pricing. For example, a competitor of the Parties submitted that there are product portfolio and price differences between both retail channels in Poland: ‘[i]n Poland, 70-75% of meat products are sold to the modern trade segment, whereas 25-30% are sold on the traditional trade segment. This is because the traditional trade segment entails more retail activities and includes a larger range of products. The modern trade segment has different conditions than the traditional trade segment, as it is run by larger companies competing stronger with each other. There are differences in pricing between the different distribution channels. Traditional trade is still more profitable, as modern trade is more competitive’.

4.2.1.1.3.3. Branded and private/white label

(19) The results of the market investigation are not conclusive on whether branded and private/white label processed poultry products belong to the same or separate product markets.

(20) Some market participants indicated that the market may include both branded and private/white label products. For instance, most customers that expressed an opinion purchase both branded and private/white label processed poultry products. Similarly, producers of processed poultry meat usually offer both products, without any difference between the different species of poultry products (e.g. chicken, turkey, duck, geese or other) or the type of poultry product (e.g. raw cured products, cooked sausages, etc). For instance, a competitor of the Parties notes that branded and private/white label processed poultry products are in direct competition with one another: ‘[r]egarding branded products and private label products, they both belong to the same market according to the Company. Branded products are offered by retailers and discounters in order to test the market for a product. When the product is accepted on the market, there will be a private label marketed in supermarkets. For example, there are many strong brands, like Animex, Sokolow, Tarczynski which consumers trust, but there is still a lot of demand for private label products’. Similarly, a customer of the Parties indicates that the only difference between branded and private/white label processed poultry products relates to the packaging: ‘both the price and the quality for private/white label and branded products are comparable, with the main difference lying in the packaging of the products’.

(21) At the same time, some respondents to the market investigation seem to suggest that branded and private/white label products may belong to different markets. For instance, a competitor of the Parties noted that ‘[i]n relation to the branded and non-branded/white label products, there is a difference in pricing of around 10-15% (branded products being more expensive). The quality of the white label products depends on the customer’s requirements. To further illustrate that branded products and private and white label products are different, […], the largest supermarket chain in Poland, has split its purchasing department with different individuals being in charge for private labels, where they have 2 to 4 suppliers providing for each [stock keeping unit], and branded products’.

(22) The results of the market investigation are also mixed with regard to the quality of branded and private/white label processed poultry products. While some market participants consider that differences exist with regards to the price and the packaging of the different categories of branded and private/white label processed poultry products, others confirmed that there is no actual difference in relation to quality and price between both categories of products.

38 Questionnaire to Customers – Responses to Question D.B.1; Questionnaire to Competitors – Responses to Question D.B.1.

39 Questionnaire to Customers – Responses to Question D.B.2; Questionnaire to Competitors – Responses to Question D.B.2.

40 Questionnaire to Customers – Responses to Question D.B.3; Questionnaire to Competitors – Responses to Question D.B.3.

41 Minutes of a call with a competitor on 22 May 2024, paragraph 10.

42 Minutes of a call with a customer on 3 June 2024, paragraph 11.

43 Minutes of a call with a competitor on 27 May 2024, paragraphs 15 and 16.

44 poultry products, others confirmed that there is no actual difference in relation to quality and price between both categories of products.

4.2.1.1.4. Conclusion

(23) The Commission considers that the exact market definition can be left open, as the proposed Transaction does not raise serious doubts as to its compatibility with the internal market or a substantial part of it under any plausible market definition.

(24) For the purposes of this Decision, based on the results of the market investigation, the competitive assessment will be carried out considering the following segmentations where the Parties’ activities overlap and give rise to affected markets: (i) by species of processed poultry meat product, considering all poultry species; (ii) by type of processed poultry product, considering the wider market for all types of processed poultry meat products as well as the narrower market for processed poultry cooked sausages; (iii) by type of retail sales channel, considering the wider market for all retail sales channels, as well as the narrower markets for the Modern trade channel, on the one hand, and the Traditional trade channel, on the other hand; and (iv) by product branding, considering the wider market for branded and private/white label products, as well as the narrower markets for branded, on the one hand, and private/white label, on the other hand.

4.2.1.2. Geographic market

4.2.1.2.1. Commission’s precedents

(25) In previous cases, the Commission considered that the markets for the supply of processed poultry meat could be national or wider than national in scope. The Polish competition authority considered the market for processed poultry products to be national in scope.

4.2.1.2.2. Notifying Party’s views

(26) The Notifying Party considers the geographic market to be larger than national due to the growing importance of European trade in the sector.

4.2.1.2.3. The Commission’s assessment

(27) The results of the market investigation were not conclusive on whether the market for the supply of processed poultry meat can be regarded as national or wider than national.

(28) While half of the respondents expressing a view consider that the market is national in scope, the other half regards the market as wider than national due to the large

44 Questionnaire to Customers and Questionnaire to Competitors - Responses to Questions D.B.4 and D.B.5.

45 Questionnaire to Customers and Questionnaire to Competitors - Responses to Questions D.B.4 and D.B.5.

46 Case M.5322 – Marfrig/Osi Group Companies, para 23.

47 President of UOKiK’s Decisions DOK-101/04 dated 11 October 2004, page 4; RBG-7/2005 dated 15 February 2005, page 3, Decision DKK 5/2015 dated 13 January 2005 (short form decision issued to DROSED, where these market definitions were accepted).

48 See paragraph 310 of the Form CO.

49 Questionnaire to Customers and Questionnaire to Competitors – Responses to Questions E.1 and E.2.

production capacity in Poland which means that products are often also sold abroad. For instance, a competitor of the Parties confirms that consumers research points at national markets for processed poultry products. Another competitor active in meat production emphasised that ‘there is a trend towards more international trade’, although 70–80% of the total production is still sold on the national market. Likewise, a customer of the Parties notes that ‘[n]o significant producers from other countries are operating in Poland to [their] knowledge’. However, numerous customers and competitors indicated that Polish producers of processed poultry meat export part of their production to neighbouring markets, suggesting that the market may be wider than national. For example, a competitor of the Parties notes that ‘[t]he low transportation costs, the fact that consumers are less focused on origin of most processed products, and the existence of import/export flows go in the direction of a wider than national market’. Similarly, a customer of the Parties noted that ‘[i]n Poland, poultry and its processed products are exported on a significant scale to various countries.’

4.2.1.2.4. Conclusion

(29) For the purposes of this Decision, the precise geographic market definition for the supply of processed poultry products can be left open, as the proposed Transaction does not raise serious doubts as to its compatibility with the internal market or a substantial part of it regardless of the geographic market definition upheld. The competitive assessment will be carried out at the narrowest plausible market where the Parties’ activities overlap and where the Transaction gives rise to affected markets, i.e. a national market encompassing Poland.

4.3. Horizontal overlaps

(30) In light of the market share data submitted by the Parties, the majority of the markets on which both Parties are active is not affected within the meaning of the Simplified Notice. The only exceptions concern:

50 Questionnaire to Customers – Responses to Questions E.1 and E.2; Questionnaire to Competitors – Responses to Questions E.1 and E.2.

51 Questionnaire to Competitors – Responses to Question E.2.

52 Questionnaire to Competitors – Responses to Question E.2.

53 Questionnaire to Customers – Responses to Question E.2.

54 Questionnaire to Competitors – Responses to Question E.2.

55 Questionnaire to Customers – Responses to Question E.2.

(a) For all species of processed poultry meat products in Poland (Section 4.3.2): (i) the supply of processed branded poultry meat to all retail channels; and (ii) the supply of processed poultry meat, including branded and private/white label, to the traditional trade channel.

(b) For processed poultry cooked sausages in Poland (Section 4.3.3): (i) the supply of processed poultry cooked sausages, private/white label products, to all retail channels; and (ii) the supply of processed poultry cooked sausages, private/white label products, to the modern trade channel.

4.3.1. Legal framework

(31) The Commission’s guidelines on the assessment of horizontal mergers under the Merger Regulation (the ‘Horizontal Merger Guidelines’) distinguish two main ways in which mergers between actual or potential competitors on the same relevant market may significantly impede effective competition, namely non-coordinated effects and coordinated effects.

(32) Non-coordinated effects may significantly impede effective competition by eliminating the competitive constraint imposed by one merging party on the other, as a result of which the merged entity would have increased market power without resorting to coordinated behaviour. According to recital 25 of the Merger Regulation, a significant impediment to effective competition can result from the anticompetitive effects of a concentration even if the merged entity would not have a dominant position on the market concerned. In this regard, the Horizontal Merger Guidelines consider not only the direct loss of competition between the merging firms, but also the reduction in competitive pressure on non-merging firms in the same market that could be brought about by the merger.

(33) The Horizontal Merger Guidelines list a number of factors, which may influence the extent to which horizontal non-coordinated effects arise from a merger, such as the large market shares of the merging firms; the fact that the merging firms are close competitors; the limited possibilities for customers to switch suppliers; or the fact that the merger would eliminate an important competitive force. This list of factors applies if a merger would create or strengthen a dominant position or would otherwise significantly impede effective competition due to non-coordinated effects. Furthermore, not all of those factors need to be present to make significant non-coordinated effects likely and the list itself is not an exhaustive list.

downstream the supply of animal by-products; (v) upstream, the purchasing of live poultry for slaughtering and downstream the supply of fresh poultry meat; and (vi) upstream, the supply of fresh poultry meat to industrial processors and downstream the supply of processed poultry meat. Since those horizontal overlaps and vertical links do not give rise to affected markets within the meaning of recital 25(g) of Annex I to the Implementing Regulation, they will not assessed in detail in this Decision.

4.3.2. Supply of processed poultry meat in Poland

(34) As explained in paragraph (30), the Transaction gives rise to four affected markets in relation to the supply of processed poultry in Poland.

Table 1 - Market shares in Poland for the supply of processed poultry meat products to retail, volume (2022)

All retail channels

Traditional Trade channel

(branded)

(branded and private label)

[10-20]%

[10-20]%

[10-20]%

[10-20]%

Combined

[20-30]%

[20-30]%

Animex

[20-30]%

[20-30]%

Cedrob

[10-20]%

[20-30]%

Drobimex

[5-10]%

[10-20]%

Sokołów

-

[10-20]%

Profi

[5-10]%

-

Others

[20-30]%

[10-20]%

TOTAL

100%

100%

61Source: Parties’ estimates

4.3.2.1. Notifying Party’s views

(35) The Notifying Party notes that the Parties’ market shares remain limited, [above 25]%, in the market for the supply of processed poultry cooked sausages in Poland and that their activities are complementary; while Indykpol focuses on turkey-based sausages, DROSED sells chicken sausages. The Notifying Party also submits that there are a number of strong competitors in the market irrespective of the precise product market definition envisaged, namely, Animex, Drobimex and Cedrob.

4.3.2.2. The Commission’s assessment

(36) The Commission takes the view that the Transaction would not significantly impede effective competition in the supply of processed poultry meat in Poland, for the following reasons.

(37) First, as seen in Table 2, the combined market shares of the Parties remain below 30% in all affected markets, irrespective of the precise product market definition. The increment brought by DROSED is also limited and does not exceed [10-20]%, under all plausible market definitions.

(38) Second, market participants confirmed that the market is fragmented with strong players that could challenge the Parties post-Transaction. For instance, the majority of customers and competitors that expressed an opinion named Animex and Cedrob as the main suppliers of processed poultry products in Poland, followed by

While the Parties’ market share estimates for 2023 do not significantly differ from those of 2022, the 2023 figures are not yet final. Hence, the competitive assessment in this Decision will rely on 2022 figures.

See Annex 18 to the Form CO.

See paragraphs 371 to 375 of the Form CO.

See paragraph 374 of the Form CO.

See Table 68 of the Form CO.

DROSED. Only a small minority of the customers considered Indykpol to be among the top three processed poultry suppliers in Poland.

Third, the Parties are not close competitors in the supply of processed poultry products; while DROSED only produces and supplies processed chicken products, Indykpol focuses on the production and supply of processed turkey products. Market participants have confirmed the complementarity of the Parties’ product offering. For instance, a competitor of the Parties notes that ‘the Parties offer very complimentary products as DROSED focuses on chicken and Indykpol on turkey (Indyk in Polish means turkey)’.

Fourth, customers can switch to a significant number of credible alternative suppliers regardless of the possible market segmentation. Market participants have indicated that the Parties will continue to face competition from processed poultry suppliers in Poland, including Animex, Cedrob, SuperDrob, Drobimex, Konspol and JBB both for branded and private/white label products.

Market participants confirmed during the market investigation that the Parties face sufficient competition in the Polish market for the supply to retailers of processed poultry products and that there are alternatives to switch to, irrespective of the precise market definition. According to a customer of the Parties, ‘the market in Poland is quite competitive as there are [...] 4 000 local producers of processed meat’. Another market participant mentioned that ‘[o]n the Polish market there are a lot of companies specializing in the production of poultry assortments’. A customer of the Parties further confirmed that it ‘see[s] alternatives to trading with these parties’.

Fifth, post-Transaction, the Parties will also be constrained by the strong buyer power of retail customers. A competitor of the Parties notes that ‘in the very fragmented markets for fresh and processed meat, […] retail customers have a strong buying power vis-à-vis suppliers. Polish retailers ensure that they have a diversified supplier base for bargaining reasons and supply safety, and the Transaction will not impact this given the number of available suppliers in the Polish market’.

Sixth, according to the Parties, customers face no switching costs. The market investigation did not indicate otherwise.

Seventh, the majority of market participants that expressed an opinion attested that they do not expect the Transaction to have a negative impact on competition in relation to processed poultry products in general and, more specifically, to prices, quality or commercial terms. According to a market participant, ‘[t]here is high competition on the Polish market and a large number of suppliers of poultry products, [and] the transaction will not affect the supply market’. Similarly, a competitor of the Parties noted that ‘[t]he Transaction will not have significant impact on our market position’.

For the above reasons, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market or a substantial part of it as a result of horizontal non-coordinated effects on the markets for the supply of processed poultry in Poland.

Supply of processed poultry cooked sausages in Poland

As explained in paragraph (30), the Transaction gives rise to four affected markets in the supply of processed poultry cooked sausages in Poland.

Table 2 - Market shares in Poland for the supply of processed poultry cooked sausages, private/white label products, by sales channel, in volume (2022)

All retail channels

Modern trade channel

[10-20]%

[10-20]%

Combined

[20-30]%

Animex

[40-50]%

Cedrob

[5-10]%

Konspol

[10-20]%

Others

[10-20]%

TOTAL

100%

Source: Parties’ estimates

Notifying Party’s views

The Notifying Party notes that the Parties’ market shares remain limited, below 25%, in the market for the supply of processed poultry cooked sausages in Poland and that their activities are complementary; while Indykpol focuses on turkey-based sausages, DROSED sells chicken sausages. The Notifying Party also submits that there are a number of strong competitors in the market irrespective of the precise product market definition envisaged, namely, Animex, Konspol and Cedrob.

The Commission’s assessment

The Commission takes the view that the Transaction would not significantly impede effective competition in the supply of processed poultry cooked sausages in Poland, for the following reasons.

First, as seen in Table 2, the combined market shares of the Parties remains below 30% in all affected markets, irrespective of the precise product market definition. The increment brought by DROSED also remains limited, [10-20]%, under all plausible market definitions. Moreover, the Parties estimate that their combined volume market share has decreased in 2023 to [20-30]% when considering all retail channels and [20-30]% specifically for the modern trade channel.

Second, while some market participants submitted that the Parties have a significant position in the supply of processed poultry cooked sausages in Poland, particularly DROSED due to its chicken production, they also confirmed that the market is very fragmented with strong players that could challenge the Parties post-Transaction. Most customers and competitors that expressed an opinion did not name the Parties amongst the main suppliers, but rather named Animex, Konspol and Cedrob as the three main suppliers of poultry cooked sausages in Poland, followed by Tarczyński and JBB. Specifically for processed poultry cooked sausages, according to market participants, the Parties will continue to face competition from numerous suppliers in Poland, including Cedrob, Animex, Indykpol, Tarczyński, Sokołow, JBB, Superdrob, Silesia, Duda and Lukosz. As showed in Table 2, Animex in particular will remain the market leader post-Transaction with a [40-50]% market share.

Minutes of a call with a competitor on 27 May 2024, paragraph 17.

Questionnaire to Customers and Questionnaire to Competitors - Responses to Questions G.1 and G.3.

Questionnaire to Customers and Questionnaire to Competitors - Responses to Questions D.A.2, G.1 and G.3.

Questionnaire to Competitors - Responses to Question G.2.

Questionnaire to Customers - Responses to Question G.3. Original in Polish: ‘Transakcja nie będzie miała wpływu na ceny, jakość i warunki handlowe, ze względu że na rynku polskim istnieje dużo firm specjalizujących się w produkcji asortymentów drobiowych które stanowią silną konkurencję’.

Minutes of a call with a customer on 29 May 2024, paragraph 18.

Questionnaire to Competitors - Responses to Question F.4.

CONCLUSION

For the above reasons, the European Commission has decided not to oppose the notified operation and to declare it compatible with the internal market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger Regulation and Article 57 of the EEA Agreement.

For the Commission

(Signed) Margrethe VESTAGER Executive Vice-President

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