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: 31/05/2023

In electronic form on the EUR-Lex website under document number 32023M10876

EUROPEAN COMMISSION

Brussels, 31.5.2023 C(2023) 3686 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 Where possible the information omitted has been replaced by ranges of figures or a general description.

BSA. S.A.S 10-12 rue Adolphe Beck 53089 Laval France

Dear Sir or Madam,

(1) On 19 April 2023, the European Commission received notification of a proposed concentration pursuant to Article 4 of the Merger Regulation.

(2) This notification concerns the following undertakings:

(4) (a) BSA S.A.S.(‘Lactalis’, France),

(b) Ambrosi S.p.A. Industria Casearia (‘Ambrosi’, Italy) (together, the ‘Parties’).

(3) Lactalis will acquire within the meaning of Article 3(1)(b) of the Merger Regulation sole control of the whole of Ambrosi. Lactalis is referred to as ‘the Notifying Party’.

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 Publication in the Official Journal of the European Union No C 145, 27.4.2023, p. 27.

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

(4) The concentration is accomplished by way of purchase of shares.

1. THE PARTIES

(5) Lactalis is a French group active in the production and supply of dairy products, in particular cheeses, milk for consumption, butter, industrial dairy products and cream, through brands such as Président, Galbani, Société, Lactel, Bridel and Parmalat, as well as under private labels. In certain countries, such as Denmark, Lactalis also provides distribution services for competitors that do not have a distribution network in the area.

(6) Ambrosi is an Italian company whose core business is to purchase Parmigiano Reggiano and Grana Padano wheels produced by third-party producers, further age them and sell them to customers. To a limited extent, Ambrosi produces Italian cheeses itself and sells butter manufactured by third parties. Ambrosi sells the products under its own brands and under private labels. Ambrosi also distributes competitors’ cheese products outside of Italy, especially in France where it has its own distribution network.

2. THE OPERATION

(7) On 14 July 2022 Lactalis concluded, through an indirectly wholly-owned subsidiary, Gruppo Lactalis Italia S.r.l. (‘GLI’), with Ambrosi a sale and purchase agreement (‘SPA’), pursuant to which GLI will acquire 100% of the shares of Ambrosi.

(8) After the concentration, Lactalis will indirectly own and have sole control over Ambrosi. The transaction therefore consists in a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

3. EU DIMENSION

(9) The combined worldwide turnover of Lactalis and Ambrosi exceeds EUR 5 billion (Lactalis: EUR […] billion; Ambrosi: EUR […] million).The EU-wide turnover of each of Lactalis and Ambrosi exceeds EUR 250 million (Lactalis: EUR […] billion; Ambrosi: EUR […] million), and Lactalis and Ambrosi do not each achieve more than two-thirds of their aggregate EU-wide turnover within one and the same Member State.

(10) The concentration therefore has an EU dimension within the meaning of Article 1(2) of the Merger Regulation.

4. INDUSTRY BACKGROUND

(11) Both Lactalis and Ambrosi are active in the production and supply of dairy products, primarily Italian cheeses.

(12) At the production level, Italian manufacturers of cheese can sell their cheeses directly to modern retail customers, such as supermarkets, or to so-called traditional retail customers, such as specialized cheese shops. In addition, cheese

5 Turnover calculated in accordance with Article 5 of the Merger Regulation.

manufacturers can sell their cheeses directly to customers in the Out-of-Home (‘OOH’) channel, which are both customers in the Ho.Re.Ca segment and industrial customers that process the cheeses further in the production of other food products. Alternatively to selling their cheeses directly to retail and OOH customers in various EEA countries and outside the EEA, many Italian manufacturers of cheese choose to sell their cheeses instead to third-party suppliers of cheeses which take care of various tasks in the supply of these cheeses to the retail and OOH channels in various geographies. This may include the packaging and branding of these cheeses, as well as negotiating distribution agreements with customers and third-party distributors. In addition, such third-party suppliers of cheeses also maintain customer relationships with retailers and other customers, as well as being involved in customer acquisition.

(13) A number of Italian cheeses, such as Parmigiano Reggiano and Grana Padano, are protected by a geographical indication label, namely Protected Designation of Origin (‘PDO’). PDO cheeses are typically produced, processed and packaged in accordance with production specifications within a specific geographical area. PDO labels are monitored and awarded by dedicated consortia, which are voluntary non-profit associations that regroup operators involved in the production of a given PDO cheese. Consortia do not produce or sell cheese themselves, but protect the designation of origin of PDO cheese, monitor the production and marketing of PDO cheese, promote the PDO, the trademarks, the consumption, image and reputation of PDO cheese and ensure the application of the production rules for PDO cheese. To this end, consortia dictate the rules that consortia members need to comply with when producing the cheese or when using the PDO trademarks and other consortia’s distinctive signs. Consortia closely monitor compliance with their rules, checking their members’ manufacturing process across the entire production chain.

(14) Only members of the PDO consortia are entitled to produce PDO Italian-type hard cheeses. All similar or even comparable cheeses produced by non-members cannot bear the PDO label or the names “Parmigiano Reggiano”, “Grana Padano” and of other PDO Italian-type hard cheeses.

(15) Contrary to non-PDO cheeses, PDO Italian-type hard cheeses are subject to production quotas limiting their annual output. In the case of Parmigiano Reggiano, the PDO Parmigiano Reggiano Consortium assigns a quota of “milk contributions” (i.e., the quota of total milk production) to PDO milk farmers based on which the quantity of PDO milk which each PDO Parmigiano Reggiano producer is entitled to purchase is calculated. This calculation corresponds to a certain number of wheels that each PDO Parmigiano Reggiano producer is entitled to produce. Each year, quotas of each member are subject to adjustments to reflect the market trends and the operations of each member. With regard to Grana Padano, each member of the PDO Grana Padano Consortium is assigned a quota by number of wheels that each member is entitled to produce per year. Each year, the overall quota is subject to slight adjustments, mostly to reflect the possible increase in exports.

6 Annexes 6.2, 6.6 and 6.10 to the Form CO (specification rules for PDO Parmigiano Reggiano, PDO Grana Padano, and PDO Pecorino Romano respectively)

7 In 2021 the total number of wheels that members of the PDO Parmigiano Reggiano Consortium were entitled to produce was 4.091 million.

8 In 2021, the total number of wheels that all members of the PDO Grana Padano Consortium were entitled to manufacture was 5,234 million.

(16) The Parties’ activities at the production level (particularly Ambrosi’s activities) are relatively limited. While Lactalis and Ambrosi both manufacture PDO Parmigiano Reggiano and PDO Grana Padano, the Parties’ combined sales of PDO Parmigiano Reggiano and PDO Grana Padano (including sales of third-party produced cheese that is resold by the Parties) represent less than [10-20]% and [5-10]% respectively of the overall production of these two cheeses. In other words, approximately [90-100]% of all PDO Parmiggiano Reggiano and Grana Padano produced is both manufactured and supplied by the Parties’ competitors. The large majority of these cheeses is therefore produced by a range of both small and large third-party manufacturers, including Agriform, Caseificio Frizza, Caseificio Gardalatte, Fattoria Cremona, Giovanni Ferrari, Galli S.r.l., Granarolo, Latteria La Grande, Margi S.r.l., Saviola and Zanetti.

(17) In addition to PDO Parmigiano Reggiano and PDO Grana Padano, Ambrosi only manufactures small quantities of dry cow mozzarella and paste filate, whereas Lactalis also manufacturers significant quantities of other types of cheeses including gorgonzola, buffalo mozzarella and mascarpone. However, even for these other types of cheeses, the volume manufactured by Lactalis only represents a relatively small share of the total market and a significant number of both small and large third-party manufacturers exist that also manufacture these cheeses. In particular, the Notifying Party estimates that Lactalis’ production share in 2022 in Italy was below 30% for cow mozzarella and paste filate, below 20% for mascarpone, ricotta and gorgonzola, and below 10% for buffalo mozzarella and taleggio.

(18) In addition to manufacturing and supplying their own-produced cheeses to retail and OOH customers across the EEA, the Parties are also active in the supply of third-party produced cheeses. In this case, the Parties mainly act as a reseller of the cheeses manufactured and processed by third parties. As noted above, Ambrosi relies entirely on third-party products for all cheeses where the Parties overlap, except for PDO Parmigiano Reggiano and PDO Grana Padano and limited quantities of dry cow mozzarella and paste filate.

(19) In addition, Ambrosi does not have its own distribution infrastructure anywhere in the EEA outside of Italy, except in France. In EEA countries other than France and Italy, Ambrosi therefore relies on third parties that distribute its cheeses to retail and OOH customers. It is important to keep in mind that these third-party distributors can provide a distribution network to rival cheese suppliers seeking to enter those countries’ markets for the supply of certain cheese types.

(20) While the quantities of each cheese that the Parties’ produce and distribute is, as described, relatively limited compared to the overall production and supply volumes of these cheeses, the quantities of cheese supplied by the Parties to each country varies (as do the Parties’ market shares across countries). In this regard, larger countries with high demand for Italian cheeses, such as Italy and France,

Form CO, paragraph 11.

Questionnaire for competitors, C.A.2.

Notifying Party’s response to RFI 9. According to the Notifying Party’s estimate, Ambrosi produces less than [0-5]% of the total paste filate and dry cow mozzarella, respectively, that is annually produced in Italy.

Form CO, Table 1.

Notifying Party’s response to RFI 9.

Form CO, paragraph 54.

absorb a larger proportion of the overall production of these cheese products, whereas smaller countries with smaller demand for Italian cheeses, such as Denmark or Belgium, absorb a smaller proportion of the overall production of these cheese products.

However, as will become clearer in Section 6, in these smaller countries, even relatively small volumes of cheese supplied can result in substantial market shares. In many cases, these high market shares merely reflect a small number of contracts with retail customers in these countries, and a very limited proportion of the overall production of these cheeses available in the EEA, and are therefore not necessarily indicative of significant market power.

Finally, in terms of barriers to entry and expansion into new countries, these tend to be the same across cheese types and sales channel as the requirements in terms of transport logistics and warehouses tend to be the same across these categories.

5. MARKET DEFINITION

As outlined in Section 4, Lactalis and Ambrosi are both active in the production and supply of dairy products.

More specifically, the Parties' activities overlap and give rise to horizontally affected markets in the supply of Italian-type hard cheeses, mainly Parmigiano Reggiano and Grana Padano; semi-hard cheeses (e.g., paste filate); fresh cheeses (e.g., mozzarella, mascarpone, ricotta), soft cheeses (e.g., gorgonzola, taleggio); and butter in Austria, Belgium, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Italy, Latvia, Netherlands, Norway, Poland, Romania, Slovakia, Spain and Sweden.

5.1. Product market definition

5.1.1. Supply of cheese

In past cases, the Commission has envisaged separate cheese supply markets by categories of products: (i) fresh cheeses (e.g. mozzarella, ricotta, mascarpone and robiola), (ii) hard cheeses (e.g. Parmigiano Reggiano, Grana Padano and pecorino), (iii) semi-hard cheeses (e.g. asiago, fontina, paste filate and provolone), (iv) soft cheeses (e.g. crescenza, taleggio, gorgonzola and brie) as well as (v) hard/semi-hard cheeses (e.g. Dutch-type cheese, emmenthal, tilsit, cheddar, manchego and danbo). The Commission also considered whether each category of cheese market could be further segmented by type of cheese due to consumers' preferences or the unique characteristics of products.

The Commission has also considered whether the markets for the supply of cheese should be further segmented on the basis of the type of milk used for the production (e.g. cow, buffalo), as well as on the basis of sales channel, namely (i) the modern retail channel (supermarkets, hypermarkets, etc.); (ii) the traditional retail channel (traditional cheese shops, market cheese shops and independent neighbourhood stores, excluding stores affiliated with a national brand); and (iii) the OOH. In addition, the Commission has considered if the markets for the supply of cheese should be further segmented between cheese with a protected designation of origin (‘PDO’) and cheese without such a protected designation, as well as between branded cheese (products bearing the brand of the manufacturer) and private label cheese (products bearing the brand of the retailer).

The distinction between private label and branded products is relevant only in the retail sales channels, where the products may bear the brand and packaging of the retailer (which is referred to as private label). In the OOH channel, the distinction between branded and private label products is not relevant and therefore the Commission has not assessed a further segmentation of products sold into the OOH channel into branded and private label.

5.1.1.1. Supply of hard cheese

Both Parties are active in the supply of different Italian-type hard cheeses, with and without PDO label (i.e. PDO Parmigiano Reggiano, PDO Grana Padano, PDO Pecorino Romano, non-PDO Italian-type hard cheese) to retailers, as well as OOH customers in a number of countries. The main Italian-type hard cheeses that the Parties sell, namely Grana Padano, Parmigiano Reggiano and Pecorino Romano, are PDO cheeses whose production follows the rules established by the relevant consortia. Cheese not fulfilling the respective PDO requirements may not bear the names Grana Padano, Parmigiano Reggiano and Pecorino Romano, or the corresponding PDO labels in the EEA. These activities include both the distribution of the Parties’ own products (whether fully produced by them or just aged) and, to a limited extent, the distribution of third-party cheese products purchased by the Parties and resold without further processing. Both Parties sell branded and private label hard-cheese products in Italy and abroad.

5.1.1.1.1. The Commission’s past practice

In previous decisions, the Commission has considered that the category of Italian-type hard cheese includes in particular the PDO cheeses Grana Padano, Parmigiano Reggiano, Pecorino Romano and Pecorino Sardo. In case M.9413 the Commission found, for the purpose of that decision, that the relevant product market was broader than a singular variety of an Italian-type hard cheese, although a majority of customers indicated that they do not regard PDO Grana Padano and PDO Parmigiano Reggiano as interchangeable with other Italian-type hard cheese alternatives.

Concerning a potential segmentation between branded and private label products, in previous decisions the Commission considered the distinction between branded and private label cheese products, and in some cases it came to the conclusion that they belong to the same, albeit differentiated market. In case M.9413, the Commission left open the precise market definition as it did not exclude that branded products primarily compete in a different market, while noting that private label cheese products exert a constraint on branded products.

With regard to a potential segmentation per sales channel, in its previous decisions, the Commission has distinguished different distribution channels for: (i) modern trade (supermarkets, hypermarkets, etc.); and (ii) OOH channel. In recent decisions the Commission has also found that, specifically with regard to semi-hard and hard cheeses (including Italian-type hard cheeses), a further segmentation would be possible between sales to (i) the modern retail channel; (ii) the OOH channel and (iii) the traditional stores channel.

5.1.1.1.2. The Notifying Party’s view

The Notifying Party argues that the relevant market could be segmented by cheese category, i.e. hard cheese, fresh cheese, soft cheese; however, it submits that further segmentation by type of cheese, branding, place of origin or sales channel does not appear relevant for the supply to retailers of Italian-type hard cheeses.

On a possible segmentation by types of cheese, the Notifying Party argues that, the average non-Italian end-customer is largely unaware of the peculiarities of PDO and non-PDO Italian-type hard cheeses and would use both types of products interchangeably for the same uses (i.e., to top dishes of pasta, or as an ingredient of other dishes). The same logic applies to Italian consumers, in the Notifying Party’s view, since only very sophisticated consumers would be more aware of the differences between both types of cheeses than regular consumers.

Concerning a possible segmentation between branded and private label products, the Notifying Party argues that: (i) both types of products compete head-to-head in terms of prices; (ii) there is high demand substitutability; and (iii) branded products have to offer significant promotions in response to competition from retailers’ private label products. Specifically with regard to Italian-type hard cheeses, the Notifying Party notes that brands carry little to no weight for PDO Parmigiano Reggiano and PDO Grana Padano since customers are already attracted by the PDO label and are lured by the well-known characteristics and high reputation of these products which must comply with the strict requirements imposed by the relevant consortia.

Regarding a potential segmentation by the designation of origin (PDO) of the cheese, the Notifying Party claims that such distinction is unwarranted since, in all EEA countries other than Italy, the vast majority of consumers buy Italian-type hard cheese to top dishes of pasta and they make no, or very little, difference between PDO and non-PDO Italian-type hard cheese.

Finally, with regard to a potential segmentation by sales channel, the Notifying Party submits that a distinction between the various distribution channels is not appropriate given that: (i) products sold in the various channels have the same ingredients and manufacturing process; (ii) there is no specific capacity quota reserved for OOH products in the Parties’ plants; (iii) the contracting process for OOH products and the average duration of those contracts is the same as for the supply of products for the retail channel; (iv) overall, margins are also comparable on both segments. Notwithstanding this, the Notifying Party also submits that the specific channel in which cheese is distributed may impact its packaging. More specifically, cheese sold in the OOH channel is normally packaged in larger formats than cheese which is intended for the retail segment. For instance, Lactalis does not have a specific product range dedicated to the OOH channel but it has products the size of which is particularly suitable (or even specifically intended) for this specific channel.

5.1.1.1.3. The Commission’s assessment

5.1.1.1.3.1. Type of cheese

The Parties supply a number of PDO and non-PDO Italian-type hard cheeses, in particular PDO Parmigiano Reggiano, PDO Grana Padano and PDO Pecorino Romano. Notably, the bulk of Ambrosi’s sales are achieved from PDO Parmigiano Reggiano and PDO Grana Padano.

The Commission considers that it is appropriate in this case to carry out the assessment at the narrowest level, i.e. at the level of: (i) PDO Parmigiano Reggiano; (ii) PDO Grana Padano; (iii) PDO Pecorino Romano; and (iv) other Italian-type hard cheeses including non-PDO cheeses.

First, unlike other Italian-type hard cheeses, the production of PDO Parmigiano Reggiano, PDO Grana Padano and PDO Pecorino Romano is monitored by dedicated consortia. Those consortia, while not producing or selling the cheese itself, attribute production quotas between their members and define the rules that consortia members have to observe in order to use the PDO label. These rules typically relate to the origin of the milk used (e.g. determined by a specific geographic area), production methods and the packaging (see paragraphs (13) to (15). As a result of those sets of rules, only cheeses complying with the requirements established by the relevant consortia will be able to bear the names “Parmigiano Reggiano”, “Grana Padano” and “Pecorino Romano”, as well as the corresponding PDO labels on the packaging and/or the product itself.

Second, the market investigation indicates that, although the consumption habits of customers may be different across Member States, from the point of view of consumers, PDO Parmigiano Reggiano and PDO Grana Padano constitute “premium” products differentiated from other PDO and non-PDO hard cheeses due to their specific production process, distinct taste profile, name recognition and higher pricing.

Third, the majority of customers and competitors expressing their views indicated that if prices of PDO Parmigiano Reggiano or PDO Grana Padano were to increase, end-customers would not switch to other Italian-type hard cheeses, including PDO Pecorino Romano. Distinctive factors of PDO Parmigiano Reggiano or PDO Grana Padano in comparison to other Italian-type hard cheeses include: (i) the taste and texture; (ii) the price difference, also dependent on the aging of the cheese, (iii) the type of recipes in which they are used; or (iv) their reputation, due to their quality recognised by the PDO labelling.

Fourth, from the perspective of the suppliers it is also difficult or very difficult to switch from producing other Italian-type hard cheeses to PDO Parmigiano Reggiano or PDO Grana Padano, and vice versa in the short terms. Competitors argue that it would be necessary to set up production facilities in the PDO-designated areas, that the development of specific know-how is crucial, and that PDO Grana Padano producers need to certify their facilities with the Consortium and be allocated a quota and a substantial financial investment.

Fifth, concerning a potential segmentation between PDO Parmigiano Reggiano, on the one hand, and PDO Grana Padano, on the other, while a majority of market participants sees them as substitutable, a large number of respondents do not think that most consumers in Europe would easily substitute Parmigiano Reggiano with Grana Padano (and vice versa). The majority of customers and competitors expressing their views indicated that if prices of PDO Parmigiano Reggiano were to increase, end-customers would switch to PDO Grana Padano, and vice versa. However, the majority of competitors submit that it would be very difficult to switch production from PDO Parmigiano Reggiano to PDO Grana Padano, and vice versa, that is, it would take longer than six months to switch production and it would be very costly. The reasons for such difficulty include the required know-how to produce each of the cheeses and the fact that the areas of production of both PDO cheeses are strictly regulated and do not overlap, which would entail the setting up of new production facilities.

Sixth, feedback from the market investigation indicates that PDO Pecorino Romano is distinct from PDO Parmigiano Reggiano and PDO Grana Padano. A customer for instance commented: “Parmigiano & Grana Padano are very specific products with a long maturing : between 9 and 20 months. Pecorino is a very young cheese with a maturing between 1 to 6 months.”

In light of the above, in particular the mixed results as regards demand-side substitutability, on a conservative basis the competitive assessment will be carried out at the narrowest level, i.e. at the level of: (i) PDO Parmigiano Reggiano; (ii) PDO Grana Padano; (iii) PDO Pecorino Romano; and (iv) other Italian-type hard cheeses.

5.1.1.1.3.2. Private label and branded

Both Parties sell private label and branded PDO and non-PDO Italian-type hard cheeses, in particular PDO Parmigiano Reggiano, PDO Grana Padano and PDO Pecorino Romano.

The Commission considers that it is appropriate in this case to carry out the assessment of Italian-type hard cheeses without distinguishing between branded and private label products.

First, market participants submit that, for PDO Italian-type hard cheeses like Parmigiano Reggiano and Grana Padano, brands have limited importance due to the high value already added by the “umbrella” PDO marking. A majority of customers and competitors argue that the PDO label (e.g. the name “Parmigiano Reggiano” or “Grana Padano” or “Pecorino Romano”) is important or very important in the final consumers' choice in Europe when purchasing Italian-type hard cheese. According to some market participants, the PDO label is perceived as a sign of quality by consumers. Similarly, the majority of market participants submit that the suppliers brands (e.g. Nuova Castelli) have limited or no relevance in the consumers’ choice when purchasing PDO Parmigiano Reggiano and PDO Grana Padano. Notwithstanding this, some respondents note that brands may be more important in certain sales channels, i.e. modern trade and traditional, than in others, i.e. OOH.

Second, the majority of customers and competitors submit that, if prices for branded PDO Parmigiano Reggiano and PDO Grana Padano were to significantly (5-10%) and lastingly increase in Europe, between a significant (10-50%) or very significant (50-100%) proportion of consumers would switch to private label products of PDO Parmigiano Reggiano and PDO Grana Padano.

Third, Ambrosi’s sales support the high degree of substitutability between branded and private label products due to the limited weight that brands carry with respect to PDO Italian-type hard cheeses. Namely, Ambrosi’s revenues (mostly derived from the sale of Parmigiano Reggiano and Grana Padano) are split as follows: (i) only [20-30]% correspond to sales of its own brands (mostly Ambrosi and Bertozzi); (ii) approximately [30-40]% consists of sales of unbranded products (i.e. products that have no brand information on them: Parmigiano Reggiano and Grana Padano wheels mostly); and (iii) the rest correspond to sales of products sold under private labels ([20-30]%, most of which in Italy) and the distribution of third party products with their own brands ([10-20]%). Similarly for Lactalis, its sales of branded PDO Italian-type hard cheeses represents […] of its overall sales of such cheeses. Fourth, with regard to other Italian-type hard cheeses, a distinction between private label and branded also does not seem appropriate in this case. For instance, a customer of the Parties notes in relation to hard cheese products that “Substitutability between national and private labels is possible. The consumer may change between private labels and Galbani, for example.” Likewise, another hard cheese customer explains that it is important for retailers to offer both private label and branded products.

In light of the above, the competitive assessment of Italian-type hard cheeses will consider branded and private label products jointly, without segmentation.

5.1.1.1.3.3. Sales channel

Both Lactalis and Ambrosi sell Italian-type hard cheese to the retail channel and to the OOH.

A vast majority of responding customers and competitors consulted in the course of the market inquiry held that there is a difference in the conditions of competition, i.e. pricing, volumes of orders, content of orders, conduct of negotiations, between supermarkets (i.e. modern retail) and traditional retailers (over-the-counter stores), as well as between supermarkets and OOH customers.

Questionnaire for customers, question D.C.9; questionnaire for competitors, question D.C.10.

Questionnaire for customers, question D.C.10, questionnaire for competitors, question D.C.11.

Form CO, paragraph 53.

Form CO, Annex 7.3.

Minutes of the call with a customer on 29 November 2022, paragraph 9. Original version in French reads as follows: “Le transfert entre les marques nationales et marques de distributeur est possible. Le consommateur peut changer entre marques de distributeur et Galbani par exemple”.

Minutes of the call with a customer on 28 November 2022, paragraph 4.

Questionnaire for customers, question D.D.1; Questionnaire for suppliers and competitors, question D.D.3.

In light of the above, the competitive assessment of Italian-type hard cheeses will be carried out by distinguishing between the modern retail, traditional retail and OOH sales channels.

5.1.1.1.3.4. Conclusion

For the purposes of this Decision, the competitive assessment will be carried out at the narrowest plausible level, i.e. distinguishing according to: (i) type of cheese between PDO Parmigiano Reggiano, PDO Grana Padano, PDO Pecorino Romano and other Italian-type hard cheeses; and (ii) sales channels between the modern retail channel, the traditional retail channel and OOH channel. For the purpose of this Decision, based on the results of the market investigation, no distinction will be made between private label and branded PDO Parmigiano Reggiano, PDO Grana Padano, PDO Pecorino Romano and other Italian-type hard cheeses.

5.1.1.2. Supply of fresh cheese

The concentration gives rise to affected markets with regard to the supply of mozzarella, burrata, ricotta, mascarpone and feta.

5.1.1.2.1. The Commission’s past practice

The Commission has previously considered that mozzarella, mascarpone, ricotta and feta constitute fresh cheeses. The Commission has further concluded that mozzarella, mascarpone and ricotta constitute separate product markets. However, the Commission has left open whether feta constitutes a separate product market. The Commission has not previously considered burrata in its decisions.

In addition, the Commission has found that mozzarella is to be further segmented by type of milk, into buffalo and cow mozzarella.

Further sub-segmentations by sales channel (modern retail, OOH customers, and traditional retail), packaging (private label and branded) and by designation of origin (PDO and non-PDO) have also been envisaged. However, the precise market definition for these potential sub-segmentations was ultimately left open.

See e.g. M.4135 Lactalis / Galbani, paragraph 9; Case M.9413, Lactalis / Nuova Castelli, paragraphs 58-59.

M.9413 Lactalis/Nuova Castelli, paragraph 43.

M.9413 Lactalis/Nuova Castelli, paragraphs 51 and 57.

M.9413 Lactalis/Nuova Castelli, paragraphs 44 and 50.

M.9413 Lactalis/Nuova Castelli, paragraphs 59-64.

M.4135 Lacalis / Galbani, paragraph 13; M.6242 Lactalis / Parmalat, paragraphs 52-53; M.9413 Lactalis / Nuova Castelli, paragraph 34.

5.1.1.2.2. The Notifying Party’s view

As for mozzarella, the Notifying Party submits that cow milk mozzarella, including burrata, and buffalo milk mozzarella are part of the same product market. In particular, the Notifying Party considers that there is a high degree of demand-side substitutability between these products which, according to that Party, are used for the same recipes and are presented in the same formats.

With regard to mascarpone, ricotta and feta, the Notifying Party argues that the market definition can be left open, as no competition concerns arise even under the narrowest plausible market definition where each cheese is considered a separate relevant product market.

The Notifying Party submits that a segmentation by sales channel and by type of packaging (branded and private label) for fresh cheeses is not appropriate for the same reasons as those listed for hard cheeses (see paragraphs (34) and (36)). For cow mozzarella specifically, Lactalis argues that the average price trends for branded and private label products follow the same trends and that this indicates that there is strong competition between branded and private label products.

Further, the Notifying Party argues that a segmentation by designation of origin outside of Italy is not warranted, because consumers in these countries generally do not make a difference between these categories. For buffalo mozzarella specifically, Lactalis argues that such a segmentation is unwarranted because the market investigation in M.9413 - Lactalis/Nuova Castelli indicated that PDO and non-PDO mozzarella were substitutes in terms of price and product characteristics and customers would switch to non-PDO alternatives in the event of a price increase of PDO mozzarella of 5-10%. Finally, Lactalis submits that such a segmentation is also not warranted in Italy, because even in Italy only a small proportion of consumers is aware of the differences between PDO and non-PDO cheeses.

5.1.1.2.3. The Commission’s assessment

5.1.1.2.3.1. Type of cheese

Regarding mozzarella, the market investigation provided conclusive evidence that separate relevant product markets exist for regular cow mozzarella, burrata and for buffalo mozzarella.

On the demand side, a majority of both customers and competitors found that consumers would not substitute cow mozzarella with either buffalo mozzarella or burrata (although some acknowledged that consumers may start to substitute these products when there are very large price differences). Regarding the differences between cow mozzarella and buffalo mozzarella, both customers and competitors emphasised that buffalo mozzarella has a stronger, more intense taste compared to cow mozzarella and that buffalo mozzarella tends to be more expensive. On the differences between cow mozzarella and burrata, both customers and competitors emphasised that burrata has a different texture, consistency and taste compared to cow mozzarella, as it is filled with stracciatella cream, and that it tends to be perceived by consumers as more of a premium product compared to regular cow mozzarella.

A Danish retailer, for example, explained that “consumers differentiate among mozzarella products mainly because of price and quality factors”. In line with several other market participants, this Danish retailer further elaborated that “discount cow mozzarella is on the lower end of the scale (cheap and low quality) whereas buffalo mozzarella and burrata are on the higher end of the scale (more expensive and higher quality)”. In contrast to the Notifying Party’s submission, this Danish retailer found that “consumers use each type of mozzarella differently (cow mozzarella for salads and buffalo mozzarella and burrata for tapas or cheese plates)”.

Similarly, a well-known French retailer explained that both from the perspective of the supply and demand side, mozzarella produced from cow and buffalo milk were not easily substitutable: “The ingredients are different, the production process is different, and the taste is different. Buffalo mozzarella is considered a premium product due to the higher quality of buffalo milk.” Another large French retailer noted that the choice of cow or buffalo milk impacts “the quality, price and the target consumer” and that “[t]o meet consumers’ needs, both types [of mozzarella] must be offered”. These views were also echoed by a large Italian cheese manufacturer that concluded that “[c]ow mozzarella and buffalo mozzarella are not substitutable”.

On the supply side, a large majority of competitors stated that it would be difficult or very difficult for a producer of cow mozzarella to start producing buffalo mozzarella or burrata (or vice versa) in a short period of time. Competitors emphasised that for such a shift in production, new machinery and specific know-how would be required, as well as the procurement of additional ingredients (buffalo milk in the case of buffalo mozzarella and stracciatella cream in the case of burrata). As such, the Commission finds that there are no grounds on the basis of supply-side substitutability to include regular cow mozzarella, buffalo mozzarella and burrata in the same product market.

Finally, with regards to feta (a typically Greek cheese supplied in small quantities by the Parties), mascarpone and ricotta, the market definition can be left open as no competition concerns arise even under the narrowest plausible product market definition in which feta, mascarpone and ricotta are viewed as separate product markets.

Therefore, the Commission will assess separately the distinct product markets for cow mozzarella, buffalo mozzarella and burrata, as well as the product markets for feta, mascarpone and ricotta.

5.1.1.2.3.2. Designation of origin

In M.9413 - Lactalis / Nuova Castelli, the Commission’s competitive assessment ultimately did not distinguish fresh cheeses by designation of origin (particularly, PDO and non-PDO). The market investigation for the present case has provided no evidence that would suggest that a distinction of fresh cheeses according to designation of origin is warranted for the present case.

5.1.1.2.3.3. Private label and branded

For fresh cheeses, the Commission’s market investigation has provided evidence that, while private label products are seen by many consumers as broadly substitutable with branded products, brands also play an important role to consumers and allow branded products to compete somewhat independently from private label products.

A majority of customers and competitors having expressed an opinion indicated that companies’ brands are important or very important when purchasing mozzarella, but a significant minority held that brands are less important or irrelevant. In this regard, a Danish retailer submitted that “consumers recognise mozzarella brands, such as those from [Lactalis’] Galbani”.

For feta, mascarpone and ricotta, a majority of responding competitors indicated that companies’ brands are important or very important, whereas a majority of responding customers indicated that companies’ brands are less relevant when purchasing these cheeses. A French retailer noted that “[f]or fresh cheese (mascarpone, ricotta) brands are also important”.

Further, a majority of competitors and customers having expressed an opinion indicated that a significant proportion of consumers (10-50%) would switch to private label products in case prices for branded mozzarella, feta, mascarpone or ricotta were to lastingly increase by 5-10% in Europe.

Questionnaire to customers, questions D.C.14 and D.C.19, and questionnaire to competitors, questions D.C.15 and D.C.20.

Minutes from a call with a Danish retailer, 3 February 2023, paragraph 14.

Questionnaire to customers, question D.C.19, and questionnaire to competitors, questions D.C.15 and D.C.20.

Courtesy translation. Original: “En ce qui concerne la mozzarella, l’importance de la marque est pareille.” and "Pour le fromage frais (mascarpone, ricotta) les marques sont également importantes.” Minutes from a call with a French retailer, 28 November 2022, paragraph 5.

Questionnaire to customers, questions D.C.17 and D.C.21, and questionnaire to competitors, questions D.C.18 and D.C.22.

Thus, while the market investigation provides some indications that branded products compete in the same market as private label products, the results of the market investigation are not conclusive in this regard.

Regarding the Notifying Party’s observation that prices for branded and private label mozzarella follow the same trends, this may be the case, even if these two product categories do not compete closely with one another, because both branded and private label mozzarella are produced from the same ingredients, mainly cow or buffalo milk, and hence co-movements in prices may be the result of underlying changes in the common cost structure between these two products rather than competitive interactions.

In light of the findings of the market investigation, the Commission considers that, for fresh cheeses, while private label products exert a constraint on branded products, this is not sufficient to exclude that branded products compete in a different market. In any event, for the purposes of the present case, the exact market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market under any plausible market definition. The Commission will therefore in its competitive assessment distinguish between branded and private label products for each of the fresh cheeses considered.

5.1.1.2.3.4. Sales channel

A vast majority of responding customers and competitors held that there is a difference in the conditions of competition, i.e. pricing, volumes of orders, content of orders, conduct of negotiations, between supermarkets (i.e. modern retail) and traditional retailers (over-the-counter stores) as well as the OOH channel.

The market investigation thus supports that a distinction should be made between the sales channels.

In any event, for the purposes of this Decision, the precise market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market irrespective of the plausible product market definition. In its competitive assessment, for each of the fresh cheeses considered, the Commission will distinguish between i) the modern retail channel, ii) the traditional retail channel, and iii) the OOH channel.

5.1.1.2.3.5. Conclusion

The Commission’s market investigation confirmed that, within the fresh cheese category, there are separate relevant product markets for cow mozzarella, buffalo mozzarella and burrata. For feta, mascarpone and ricotta, while the Commission will consider each of these as separate products markets for the competitive assessment, the precise market definition can be left open as no competition concerns arise even under this narrowest plausible market.

In relation to the distinction between private label and branded products, for the purposes of the present case, the competitive assessment of the concentration will be carried out at the narrowest plausible segmentation, i.e., separately for private

Questionnaire for customers, question D.D.1, and questionnaire for competitors, question D.D.3.

label and branded products. Similarly, in relation to the sales channel, for the purposes of the present case, the competitive assessment of the concentration will be carried out at the narrowest plausible segmentation, namely separately for i) the modern retail channel, ii) the traditional retail channel, and iii) the OOH channel.

5.1.1.3. Supply of soft cheese

As mentioned above, the market for the supply of soft cheese includes the cheese types crescenza, taleggio, gorgonzola and brie. As will be further addressed under the competitive assessment, the concentration gives rise to affected markets with regard to the supply of the cheese types gorgonzola, taleggio and magor. Both taleggio and gorgonzola are PDO cheeses which must be produced in accordance with certain product specification rules that are monitored by the Gorgonzola Consortium and the Taleggio Consortium, respectively. Cheese not fulfilling the respective PDO requirements for taleggio and gorgonzola may not bear the names taleggio or gorgonzola, or the corresponding PDO labels in the EEA. Magor, a cheese made of layers of mascarpone and gorgonzola, is not a PDO cheese.

5.1.1.3.1. The Commission’s past practice

The Commission has found that the market for soft cheese includes the cheese types taleggio and gorgonzola. The Commission has not considered whether taleggio is a distinct product market, nor has it has considered magor in its past decisions.

With regard to gorgonzola, in M.9413 Lactalis / Nouva Castelli, the Commission considered whether gorgonzola constitutes a separate product market from other blue cheeses, but ultimately left the exact product market definition open. In that case, the majority of responding customers submitted that gorgonzola is not substitutable or only partially substitutable with other types of blue cheeses in terms of price and product characteristics, and that end-consumers would not switch to other blue cheeses if prices of gorgonzola were to increase. Contrarily, the majority of responding competitors submitted that, in case of a price increase for gorgonzola, customers would switch to other blue cheeses (in particular roquefort). Moreover, the Commission considered whether the relevant market encompassed both PDO gorgonzola and cheese not fulfilling the PDO requirements for gorgonzola, but it ultimately left the exact market definition open. In this regard, the majority of responding customers held that PDO and “non-PDO gorgonzola” were not alternatives in terms of price and product characteristics.

See e.g. M.4135 Lactalis / Galbani, paragraph 9.

Consorzio per la Tutela del Formaggio Gorgonzola DOP (‘Gorgonzola Consortium’) and Consorzio Tutela Taleggio (‘Taleggio Consortium’).

Form CO, paragraph 630. Ambrosi also sells negligible quantities of gorgonzola to which truffles have been added and which therefore cannot bear the PDO label or the name gorgonzola. Lactalis does not sell such cheese. Due to the negligible quantities sold by Ambrosi, the concentration does not bring a material change to a potential market encompassing both PDO gorgonzola and cheese which do not fulfil the PDO requirements for gorgonzola. On this basis the Commission finds that the concentration does not raise serious doubts concerning such a market.

and that if prices of PDO gorgonzola were to increase by 5-10%, end-consumers would not switch to “non-PDO gorgonzola”. By contrast, the majority of responding competitors submitted that, in case of such a price increase for PDO gorgonzola, end-customers would switch to “non-PDO gorgonzola”.

As mentioned above, the Commission has also considered whether the supply of cheese could be further sub-segmented between private label and branded products, as well as between different sales channels (modern retail, OOH channel, and traditional retail), but it ultimately left the exact market definition open.

5.1.1.3.2. The Notifying Party’s view

With regard to taleggio, gorgonzola and magor, the Notifying Party submits that the precise market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market even under the narrowest possible segmentation.

In general, the Notifying Party submits that a segmentation of the cheese markets between PDO and non-PDO is unwarranted, referring to, inter alia, that (i) only very sophisticated and experienced consumers can appreciate the distinction and (ii) that customers would switch between PDO and non-PDO cheeses in case the prices would increase for either type.

Concerning a possible segmentation between branded and private label cheese, the Notifying Party submits that: (i) both types of products compete head-to-head in terms of prices; (ii) there is a high demand substitutability; and (iii) branded products have to offer significant promotions to face competition from retailers’ private label products.

Finally, the Notifying Party submits that a segmentation between the various distribution channels is not appropriate since: (i) products sold in the various channels have the same ingredients and manufacturing process; (ii) there is no specific capacity quota reserved for OOH products in the Parties’ plants; (iii) the contracting process for OOH products and the average duration of those contracts is the same as for the supply of products for the retail channel; (iv) overall, margins are also comparable on both segments. Notwithstanding this, the Notifying Party also submits that the specific channel in which cheese is distributed may impact the packaging of the cheese – cheese sold in the OOH channel is normally packaged in larger formats than cheese which is intended for the retail segment. However, the Notifying Party submits that the exact market definition can be left open since the concentration raises no competitive concerns under either product market definition.

M.9413 Lactalis / Nuova Castelli, paragraph 69.

M.9413 Lactalis / Nuova Castelli, paragraph 69.

M.9413 Lactalis / Nuova Castelli, paragraph 96.

5.1.1.3.3. The Commission’s assessment

5.1.1.3.3.1. Type of cheese

5.1.1.3.3.1.1. Taleggio

A large majority of the customers expressing their views held that most final consumers in Europe would generally not substitute taleggio with other soft cheeses. Competitors’ views on the substitutability were less uniform. Three of the responding competitors held that most consumers in Europe would generally not substitute taleggio with other soft cheeses, whilst three competitors held that consumers would substitute taleggio in case of a lasting price increase of 5-10% for taleggio. As to the eventual differences between taleggio and other soft cheeses, both customers and competitors indicated that taleggio is different with regard to taste, quality, texture and price.

The market investigation thus indicates that there may be limited demand-side substitutability between taleggio and other soft cheeses due to consumer preferences.

5.1.1.3.3.1.2. Gorgonzola

(94)In the market investigation, several of the Parties’ customers that expressed an opinion indicated that most final consumers in Europe would generally switch between gorgonzola and other blue cheeses, whilst a majority of the customers held that final consumers would substitute gorgonzola with other blue cheeses if there would be a lasting increase of the price of gorgonzola of 5-10%. Nevertheless, a significant minority held that most final consumers would generally not substitute gorgonzola with other blue cheeses.

(95)Moreover, whilst one of the Parties’ competitors that expressed an opinion held that most final consumers in Europe would generally substitute gorgonzola with other blue cheeses, three of the competitors held that final consumers would substitute gorgonzola with other blue cheeses in case of a lasting price increase of 5-10% for gorgonzola. By contrast, three competitors indicated that final consumers would generally not substitute gorgonzola with other blue cheeses. One gorgonzola competitor explained that “[i]n Italy, other blue cheeses do not compete with Gorgonzola. However, in other European countries, Gorgonzola competes with other blue cheeses such as German Bergader, Danish blue cheese and Danish blue castello, French Roquefort and the English Stilton cheese.”

(96)The customers and competitors who did not think final consumers would switch to other blue cheeses referred to the different taste, quality and texture of gorgonzola and the gorgonzola name (i.e. the PDO label) as characteristics that differentiate gorgonzola from other blue cheeses.

Questionnaire to customers, question D.A.D.13.

Questionnaire to competitors, question D.A.D.13.

Questionnaire to customers, question D.A.D.15; Questionnaire to competitors, question D.A.D.15.

Questionnaire to customers, question D.A.C.1.

Questionnaire to competitors, question D.A.C.1.

Minutes of call with a competitor on 13 January 2023, paragraph 8.

Questionnaire to customers, question D.A.C.3; Questionnaire to competitors, question D.A.C.3.

(97)Furthermore, a majority of responding competitors held that it is very difficult to start producing gorgonzola in the short term, as it would take more than six months to set up production and it would be very costly. When asked about the reason for this, all competitors expressing an opinion referred to the PDO label requirements for gorgonzola. Specifically, the competitors mentioned that the cheese has to be produced in a certain area in Italy, that it requires certain milk and that it requires specific expertise and know-how. One competitor explained that “it is difficult to start producing gorgonzola as it is difficult to maintain the standard of quality” and then referred to that “the production, aging and packaging must be carried out in the area of the PDO and the production and aging techniques should be in line with the rules of the PDO.”

(98)Thus, whilst most responding customers and competitors held that final consumers would substitute gorgonzola with other blue cheeses, at least in case of a lasting and significant price increase, this view was not shared by an important part of the respondents. Also, there is little to no supply-side substitutability. The results of the market investigation are therefore not conclusive.

5.1.1.3.3.1.3. Magor

(99)With regard to the substitutability of magor with other soft cheeses, the views of competitors and customers are not entirely uniform.

(100)Of the customers that expressed their views, 11 customers held that most final consumers would substitute magor with other soft cheeses in case of a lasting price increase of 5-10% for magor, and 4 held that final customers would generally switch between the cheeses irrespective of the price difference. However, 13 customers indicated that most final consumers in Europe would generally not substitute magor with other soft cheeses.

(101)Moreover, whilst three of the competitors who expressed an opinion held that final consumers would substitute magor with other soft cheeses in case of a lasting price increase of 5-10% for magor, two competitors held that consumers generally do not substitute magor with other soft cheeses.

(102)As to the eventual differences between magor and other soft cheeses, customers and competitors indicated that magor is different with regard to taste, texture and price.

(103)Thus, a slight majority of customers and competitors would substitute magor with other soft cheeses, at least in case of a lasting and significant price increase, which would indicate that magor is not a distinct product market. However, given the significant minority that would not substitute magor in this way, the results of the market investigation are not conclusive.

Questionnaire to competitors, question D.A.C.4.

Questionnaire to competitors, question D.A.C.5.

Minutes of call with a competitor on 13 January 2023, paragraph 12.

Questionnaire to customers, question D.A.D.7.

Questionnaire to competitors, question D.A.D.7.

Questionnaire to customers, question D.A.D.9; Questionnaire to competitors, question D.A.D.9.

(104)For the purposes of this Decision, the precise market definition with regard to taleggio, gorgonzola and magor can be left open, since even when narrowly sub-segmented by cheese type instead of considering a broader market for the supply of soft cheese, the concentration does not raise serious doubts as to its compatibility with the internal market as will be further explained in the competitive assessment.

5.1.1.3.3.2. Private label and branded

(105)A majority of customers having expressed an opinion indicated that companies’ brands are less relevant when purchasing taleggio, gorgonzola and magor, whilst a significant minority held that brands are important when purchasing these cheeses.

(106)Contrarily, the majority of responding competitors indicated that companies’ brands are important or very important when purchasing taleggio, gorgonzola and magor, but a significant minority held that brands are less important or irrelevant. With regard to gorgonzola specifically, one competitor stated that “there is a difference in the brand awareness between Italy and other European countries. In Italy, brands are more important as consumers are loyal to Gorgonzola brands. […] In the rest of Europe, brands are not strongly represented and the consumption of Gorgonzola is lower.”

(107)Nevertheless, in case prices for branded taleggio, gorgonzola and magor were to lastingly increase by 5-10% in Europe, a vast majority of competitors and customers having expressed an opinion indicated that a significant proportion of consumers (10-50%) would switch to private label products.

(108)Thus, the market investigation indicates that branded products may compete with private label products, at least outside Italy. However, the results of the market investigation are not conclusive in this regard.

(109)In any event, for the purposes of this Decision, the precise market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market irrespective of the plausible product market definition.

5.1.1.3.3.3. Sales channel

(110)A vast majority of responding customers and competitors held that there is a difference in the conditions of competition, i.e. pricing, volumes of orders, content of orders and conduct of negotiations, between supermarkets (i.e. modern retail) and traditional retailers (over-the-counter stores) as well as OOH customers.

(111)The market investigation thus supports that a distinction should be made between the sales channels.

Questionnaire to customers, question D.C.19.

Questionnaire to competitors, question D.C.20.

Minutes of call with a competitor on 13 January 2023, paragraph 13.

Questionnaire to customers, question D.C.21. Questionnaire to competitors, question D.C.22.

(112)In any event, for the purposes of this Decision, the precise market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market irrespective of the plausible product market definition.

5.1.1.3.3.4. Conclusion

(113)For the purposes of this Decision, the competitive assessment will be carried out at the narrowest plausible level, i.e. for each cheese type, segmented between branded and private label products and between sales channels. However, the exact market definitions with regard to gorgonzola, taleggio and magor can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market under any plausible market definition.

5.1.1.4. Supply of semi-hard cheese

(114)As mentioned above, the market for the supply of semi-hard cheese includes the cheese types paste filate, asiago, fontina and provolone. As will be further addressed under the competitive assessment, the concentration gives rise to affected markets with regard to the supply of the cheese type paste filate.

5.1.1.4.1. The Commission’s past practice

(115)In past cases, the Commission has considered that the category of semi-hard cheese includes paste filate. However, it has not previously been considered whether paste filate constitutes a distinct product market.

(116)Moreover, as mentioned above, the Commission has considered whether the supply of cheese could be further sub-segmented between private label and branded products, as well as between different sales channel (modern retail, OOH channel, and traditional retail), but it ultimately left the exact market definition open.

5.1.1.4.2. The Notifying Party’s view

(117)With regard to paste filate, the Notifying Party submits that the precise market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market even under the narrowest possible segmentation.

(118)Concerning a possible segmentation between branded and private label cheese, the Notifying Party submits that: (i) both types of products compete head-to-head in terms of prices; (ii) there is a high demand substitutability; and (iii) branded products have to offer significant promotions to face competition from retailers’ private label products.

See e.g. M.4135 Lactalis / Galbani, paragraph 9.

Provolone and scamorza.

(119)Finally, the Notifying Party submits that a segmentation between the various distribution channels is not appropriate since: (i) products sold in the various channels have the same ingredients and manufacturing process; (ii) there is no specific capacity quota reserved for OOH products in the Parties’ plants; (iii) the contracting process for OOH products and the average duration of those contracts is the same as for the supply of products for the retail channel; (iv) overall, margins are also comparable on both segments. Notwithstanding this, it also submits that the specific channel in which cheese is distributed may impact the packaging of the cheese – cheese sold in the OOH channel is normally packaged in larger formats than cheese which is intended for the retail segment. However, the Notifying Party submits that the exact market definition can be left open since the concentration raises no competitive concerns under either product market definition.

5.1.1.4.3. The Commission’s assessment

5.1.1.4.3.1. Type of cheese

(120)A majority of competitors who expressed their views held that most final consumers in Europe would substitute paste filate with other semi-hard cheeses in case of a lasting price increase of 5-10% for paste filate. Contrarily, the majority of responding customers indicated that final consumers in Europe generally would not substitute paste filate with other semi-hard cheeses, although a significant minority held that they would substitute paste filate in this way in case of a lasting price increase of 5-10% for paste filate. As to the eventual differences between paste filate and other semi-soft cheeses, customers and competitors indicated that paste filate is different with regard to taste, structure, price and usage.

(121)The views of customers and competitors as to the substitutability between paste filate and other semi-soft cheeses are thus not uniform.

(122)In any event, for the purposes of this Decision, the precise market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market irrespective of the plausible product market definition.

5.1.1.4.3.2. Private label and branded

(123)The majority of competitors having expressed an opinion indicated that companies’ brands are important or very important when purchasing paste filate, but a significant minority held that brands are less important or irrelevant. Contrarily, a majority of responding customers indicated that companies’ brands are less relevant when purchasing paste filate, whilst a significant minority held that brands are important.

(124)Nevertheless, in case prices for branded paste filate were to lastingly increase by 5-10% in Europe, a vast majority of competitors and customers having expressed an opinion indicated that a significant proportion of consumers (10-50%) would switch to private label products.

Form CO, paragraphs 170-172.

Form CO, paragraph 175.

Questionnaire to competitors, question D.A.D.10.

Questionnaire to customers, question D.A.D.10.

Questionnaire to customers, question D.A.D.12; Questionnaire to competitors, question D.A.D.12.

(125)Thus, the market investigation indicates that branded products may compete with private label products. However, the results of the market investigation are not conclusive in this regard.

(126)In any event, for the purposes of this Decision, the precise market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market irrespective of the plausible product market definition.

5.1.1.4.3.3. Sales channel

(127)A vast majority of responding customers and competitors held that there is a difference in the conditions of competition, i.e. pricing, volumes of orders, content of orders and conduct of negotiations, between supermarkets (i.e. modern retail) and traditional retailers (over-the-counter stores) as well as OOH customers.

(128)The market investigation thus supports that a distinction should be made between the sales channels.

(129)In any event, for the purposes of this Decision, the precise market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market irrespective of the plausible product market definition.

5.1.1.4.3.4. Conclusion

(130)For the purposes of this Decision, the competitive assessment will be carried out at the narrowest plausible level, i.e. for the cheese type paste filate, segmented between brands and private label products and between sales channels. However, the exact market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market under any plausible market definition.

5.1.1.5. Supply of hard/semi-hard cheese

(131)As mentioned above, within the category of hard/semi-hard cheeses, there are the cheese types Dutch-type cheese (i.e. Gouda, Maasdam and Edam) as well as emmental, tilsit, cheddar, manchego and danbo. As will be further addressed in the competitive assessment, the concentration gives rise to affected markets with regard to the supply of the hard/semi hard cheese Swiss-type cheese, i.e. cheese of Swiss origin (emmental, appenzeller, gruyere, raclette, fondue, tete de moine, sbrinz, bergkäse, fromage fribourg, vacherin mont d’or).

5.1.1.5.1. The Commission’s past practice

(132)The Commission has not considered Swiss-type cheese in its past decisions.

Questionnaire to customers, question D.A.D.1; Questionnaire for supplier sand competitors, question D.D.3.

(133)As mentioned above, the Commission has in past practice considered whether the supply of cheese could be further sub-segmented between private label and branded products, and between different sales channel (modern retail, OOH channel, and traditional retail), but it ultimately left the exact market definition open.

5.1.1.5.2. The Notifying Party’s view

(134)With regard to Swiss-type cheese, the Notifying Party submits that the exact definition of the relevant market can be left open as the concentration will not give rise to a significant impediment of competition, even under the narrowest possible segmentation.

(135)Concerning a possible segmentation between branded and private label cheese, the Notifying Party submits that: (i) both types of products compete head-to-head in terms of prices; (ii) there is a high demand substitutability; and (iii) branded products have to offer significant promotions to face competition from retailers’ private label products.

See e.g. M.9413 Lactalis/Nuova Castelli, paragraph 96.

M.10260 - Lactalis/Leerdammer, paragraph 43.

(136)Finally, the Notifying Party submits that a segmentation between the various distribution channels is not appropriate since: (i) products sold in the various channels have the same ingredients and manufacturing process; (ii) there is no specific capacity quota reserved for OOH products in the Parties’ plants; (iii) the contracting process for OOH products and the average duration of those contracts is the same as for the supply of products for the retail channel; (iv) overall, margins are also comparable on both segments. Notwithstanding this, it also submits that the specific channel in which cheese is distributed may impact the packaging of the cheese – cheese sold in the OOH channel is normally packaged in larger formats than cheese which is intended for the retail segment. However, the Notifying Party submits that the exact market definition can be left open since the concentration raises no competitive concerns under either product market definition.

5.1.1.5.3. The Commission’s assessment

5.1.1.5.3.1. Type of cheese

(137)In the market investigation, a vast majority of the Parties’ competitors that expressed an opinion held that final consumers in Europe would switch to other hard/semi-hard cheeses in case of a lasting price increase of 5-10% for Swiss-type cheese.

(138)Of the Parties’ customers expressing an opinion in the market investigation, 9 customers stated that most final consumers in Europe would generally switch between Swiss-type cheese and other hard/semi-hard cheeses irrespective of price difference, whilst 21 customers held that final consumers in Europe would switch to other hard/semi-hard cheeses in case of a lasting price increase of 5-10% for Swiss-type cheese. However, 22 customers indicated that final consumers in Europe would generally not substitute Swiss-type cheese with other hard/semi-hard cheeses. These customers mainly listed the following characteristics as differentiating Swiss-type cheese from other hard/semi-hard cheese: the taste, characteristics, premium quality, Swiss heritage and higher price.

(139)Thus, since a majority of the Parties’ competitors and customers are of the view that final consumers would substitute Swiss-type cheese with other hard/semi-hard cheeses, at least in case of a lasting and significant price increase for Swiss-type cheese, the market investigation points to that Swiss-type cheese should not be distinguished from other hard/semi-hard cheeses.

(140)In any event, for the purposes of this Decision, the precise market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market irrespective of the plausible product market definition.

5.1.1.5.3.2. Private label and branded

(141)The majority of competitors having expressed an opinion indicated that companies’ brands are important or very important when purchasing Swiss-type cheese, but a significant minority held that brands are less important or irrelevant. Contrarily, a majority of responding customers indicated that companies’ brands are less relevant when purchasing Swiss-type cheese, whilst a significant minority held that brands are important.

(142)Nevertheless, in case prices for branded Swiss-type cheese were to lastingly increase by 5-10% in Europe, a vast majority of competitors and customers having expressed an opinion indicated that a significant proportion of consumers (10-50%) would switch to private label products.

(143)Thus, the market investigation indicates that branded products may compete with private label products. However, the results of the market investigation are not conclusive in this regard.

(144)In any event, for the purposes of this Decision, the precise market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market irrespective of the plausible product market definition.

5.1.1.5.3.3. Sales channel

(145)A vast majority of responding customers and competitors held that there is a difference in the conditions of competition, i.e. pricing, volumes of orders, content of orders and conduct of negotiations, between supermarkets (i.e. modern retail) and traditional retailers (over-the-counter stores) as well as OOH customers.

(146)The market investigation thus supports that a distinction should be made between the sales channels.

(147)In any event, for the purposes of this Decision, the precise market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market irrespective of the plausible product market definition.

5.1.1.5.3.4. Conclusion

(148)For the purposes of this Decision, the competitive assessment will be carried out at the narrowest plausible level, i.e. for the cheese type Swiss-type cheese, segmented between brands and private label products and between sales channels. However, the exact market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market under any plausible market definition.

5.1.2. Supply of butter

(149)The concentration gives rise to affected markets with regard to butter packets and butter bulks.

5.1.2.1. The Commission’s past practice

(150)In previous practice, the Commission has found that there are separate product markets for butter sold in bulk and sold in packets and that butter packets constitute a separate market from other vegetable fats. It has also been considered, but ultimately left open, whether butter packets should be segmented by branded and private label products.

(151)The Commission also came to the conclusion that dairy butter can be divided into (i) basic butter (with an 82% fat content); (ii) butter oil (or non-fractionated butter oil, i.e., with a 99.8% fat content) and (iii) fractionated butter oil (or fractionated butter).

(152)In addition, the Commission held that vegetable fats (namely, margarine) are not in the butter market. The Commission, however, left open the question whether plain butter and butter with additives constitute separate markets.

(153)In the most recent decision involving Lactalis, the Commission left open the precise market definition for the production and sale of butter.

5.1.2.2. The Notifying Party’s view

(154)The Notifying Party argues that the precise product market definition can be left open due to the absence of concerns under any plausible market definition.

M.6722 Frieslandcampina / Zijerveld & Veldhuyzen And Den Hollander, paragraphs 109-112.

M.6119 Arla / Hans, paragraph 30.

M.6722 Frieslandcampina / Zijerveld & Veldhuyzen And Den Hollander, paragraph 109.

M.5046 Friesland / Campina, paragraph 834. By fractionating butter, it is possible to “sort” the butter particles in accordance with their melting range; for example, butter with a melting range starting at 10, or 20, or 45 C°. Likewise, it is possible to produce extra white butter or (with the addition of carotene) extra yellow butter.

M.9413 Lactalis / Nuova Castelli, paragraph 107.

5.1.2.3. The Commission’s assessment

(155)The vast majority of both customers and competitors indicated that consumers would generally not be willing to substitute butter with other vegetable fats, such as margarine, except if there was a very large price difference. Some customers emphasised the difference in taste, use cases and price as characteristics distinguishing butter from vegetable fats.

(156)Further, a majority of both customers and competitors indicated that consumers would not substitute butter sold in packets with butter sold in bulk as most consumers in Europe do not find both types of butter interchangeable with each other. One competitor noted that butter in packets is normally branded and therefore consumers have a higher degree of trust in butter packets compared to butter sold in bulk, whereas another competitor noted that butter packets are easier to store and use than butter sold in bulk.

For the purposes of the present case, the competitive assessment will be carried out at the narrowest plausible level at which the Parties compete in, distinguishing butter from other vegetable fats and distinguishing butter sold in packets from butter sold in bulk. For the same reasons that were given for the supply of cheeses, the competitive assessment will also distinguish between branded and private label packaging, and between the sales channel (i.e., modern retail, traditional retail and the OOH channel). The exact market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market under any plausible market definition.

5.2. Geographic market definition

5.2.1. Supply of cheese

5.2.1.1. The Commission’s past practice

(158)In previous cases, the Commission concluded that the narrowest plausible markets for the supply of cheese are national in scope.

5.2.1.2. The Notifying Party’s view

(159)The Notifying Party does not disagree with the Commission’s precedents that the markets for the supply of branded cheeses are national in scope.

(160)However, the Notifying Party argues that the market for the supply of private label cheese to retailers is wider than national because (i) retailers organise European-wide calls for tenders and some European retailers have regrouped their activities in buying alliances; (ii) suppliers merely make industrial capacity available to retailers, which can be located in various EEA countries; (iii) imports and exports of cheese are significant in the EU; (iv) the labelling of products does not constrain competition between suppliers from various Member States, and (v) prices for private label cheeses are homogenous across various Member States.

(161)Finally, the Notifying Party argues that the precise product market definition can be left open due to absence of concerns under any plausible market definition.

5.2.1.3. The Commission’s assessment

(162)The majority of both customers and competitors consider that differences between consumer preferences and competitive conditions (e.g., prices, suppliers available, type of products) for the supply of Italian-type hard cheeses and other Italian cheeses across EEA member states are significant or very significant. Customers and competitors particularly stressed differences in consumer behaviour across these countries. Further, the market investigation has not brought forward any contradicting evidence to the Commission’s conclusion in previous cases that the narrowest plausible market for the supply of cheeses more generally (including non-Italian cheeses) is national in scope.

(163)For the purpose of this decision, the competitive assessment for the supply of cheese will be carried out at the narrowest level, i.e. a national level. However, the precise geographic market definition can be left open as the concentration does not raise serious doubts as to its compatibility with the internal market under any plausible geographic market definition, including at the EEA level.

5.2.2. Supply of butter

5.2.2.1. The Commission’s past practice

(164)In one previous case, the Commission considered the geographic market for bulk butter, fractionated butter oil and non-fractionated butter oil to be EEA-wide, whereas in another previous case, the Commission assessed the concentration at the narrowest plausible geographic market for bulk butter, which is national in scope.

(165)With regard to packet butter, the Commission considered in a previous decision that the relevant geographic market was wider than national but left open whether it was EEA-wide or narrower than EEA-wide (i.e., specific regions within the EEA). In another case, the Commission assessed the concentration at the narrowest plausible geographic market for packet butter, i.e. at the national level.

5.2.2.2. The Notifying Party’s view

(166)The Notifying Party considers that the markets for butter are EEA-wide, or at least regional. However, in the absence of significant overlapping activities of the Parties on these markets, the Notifying Party submits that this question may be left open.

5.2.2.3. The Commission’s assessment

(167)While a majority of responding customers found that differences in consumer preferences and competitive conditions (e.g., prices, active suppliers, type of products) for the supply of butter across EEA member states are significant or very significant, an equal number of responding competitors found that these differences are significant as those that found them to be insignificant. None of the customers and competitors that expressed an opinion found that the answer to this question would change depending on whether one were to look at the supply of bulk butter or butter packets.

(168)For the purposes of this decision, the competitive assessment of the concentration will be carried out at the narrowest level possible, i.e. at a national level.

6. COMPETITIVE ASSESSMENT

6.1. Legal framework

(169)Article 2 of the Merger Regulation requires the Commission to examine whether notified concentrations are compatible with the internal market, by assessing whether they would significantly impede effective competition in the internal market or in a substantial part of it. The Commission 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.

(170)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 combined entity would have increased market power without resorting to coordinated behaviour. According to recital (25) of the preamble of the Merger Regulation, a significant impediment to effective competition can result from the anticompetitive effects of a concentration even if the combined 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.

Form CO, paragraph 516.

Questionnaire for customers, question G.1, and questionnaire for competitors, question G.1.

Questionnaire for customers, question G.2, and questionnaire for competitors, question G.2.

(171)The Horizontal Merger Guidelines list a number of factors, which may influence the rise of substantial non-coordinated effects 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. The list of factors applies equally 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.

6.2. Methodology for market shares

(172)According to the Horizontal Merger Guidelines and the Non-Horizontal Merger Guidelines, market shares constitute useful first indications of the market structure and of the competitive importance of the market players.

(173)The Notifying Party submitted market shares in volume and value, when available, for each plausible product and geographic market. The approach adopted by the Notifying Party largely follows the approach adopted by the European Commission in the M.9413 Lactalis/Nuova Castelli decision.

(174)Where available, the Notifying Party used retail data from Nielsen or IRI as a proxy for the total market size. Nielsen and IRI panel data record the total volume of cheese / butter sold to consumers at retail level nationally. Similarly, subject to availability, the market size for value-based market shares was based on the total value recorded by the panels. The panel data includes total market size estimates, distinguishing between branded and private label sales, for the modern and traditional retail channels in Italy and Spain, as well as for the modern retail channel only in all other countries.

(175)For countries where panel data is unavailable, the Notifying Party has primarily relied on country-level data from Eurostat on import, export and production volumes (with differing levels of detail) as well as several adjustment factors to account for missing or incomplete data. For magor, mascarpone and ricotta, which are not covered individually in the Eurostat data, the Notifying Party has relied on geographical proxy countries in which the relevant data is available, by assuming that the per capita cheese consumption is the same in these proxy countries.

Horizontal Merger Guidelines, paragraphs 24-38.

The Notifying Party has presented an alternative market share approach where sales of the Parties’ private label products are allocated to competitors rather than to the Parties’ own market shares. According to the Notifying Party, this is appropriate because the Parties’ private label products compete with the Parties’ branded products at the retail level. However, as the competitive assessment is primarily concerned with the impact of the concentration on the wholesale supply of cheese and butter products (where each Party’s private label products do not compete with the same Party’s branded products), the remainder of the Decision focusses on the standard market share estimates.

An exception to this is the use of adjustment factors for some plausible markets based on data from the French institute AgriMer.

Data from Nielsen or IRI was available for the following countries: Belgium, Denmark, France, Germany, Greece, Italy, the Netherlands, Poland, Spain, and Sweden.

In its competitive assessment, the Commission ultimately relied on the volume-based market shares as the Parties were unable to provide value-based market shares for some sub-segments.

(176)To estimate the channel split between retail (modern and traditional) and OOH (Ho.Re.Ca and industrial), the Notifying Party has primarily relied on estimates by the French institute AgriMer on the distribution of cheese consumption in France by sales channel, assuming that the distribution of cheese consumption by sales channel is the same in all EEA countries as in France, except in Italy.

(177)For consistency purposes, the Notifying Party has relied on the panel data for the Parties’ own sales of branded products. For private label sales as well as for countries in which the panel data is unavailable, the Notifying Party has used the Parties’ own sales data as well as some adjustment factors as the Parties’ own sales volumes.

(178)The Commission examined the methodology and the market shares provided by the Notifying Party, and used the market shares by volume as a primary tool for determining the competitive strength of the Parties. In the present case, the Commission has not undertaken a full market reconstruction due to the large number of markets that were examined as well as the fact that the Notifying Party closely followed the approach chosen by the Commission in the M.9413 Lactalis/Nuova Castelli. However, the Commission notes that, in some plausible markets, responses from the market investigation suggest that the combined shares of the Parties estimated by the Notifying Party may substantially overestimate the Parties’ actual combined shares in these markets. In these plausible markets, the Commission has noted the potential overestimation in the Parties’ market share in the competitive assessment.

6.3. Horizontal non-coordinated effects

(179)Based on the market share data submitted by the Notifying Party, the concentration would give rise to horizontally affected markets in Austria (Section 6.3.1), Belgium (Section 6.3.2), Croatia (Section 6.3.3), Denmark (Section 6.3.4), Estonia (Section 6.3.5), Finland (Section 6.3.6), France (Section 6.3.7), Germany (Section 6.3.8), Greece (Section 6.3.9), Italy (Section 6.3.10), Latvia (Section 6.3.11), Norway (Section 6.3.12), Poland (Section 6.3.13), Romania (Section 6.3.14), Spain (Section 6.3.15) and Sweden (Section 6.3.16).

In the following segments, the Commission will address potential competition concerns in all affected markets under the narrowest plausible market definition. The Commission will focus its assessment on the narrowest plausible markets, because, in the present case, the Parties’ combined market shares and overall

For the channel split in Italy, the Notifying Party has relied on data from the Buffalo Mozzarella consortium for buffalo mozzarella, cow mozzarella and burrata, as well as on the AgriMer data for all other products.

In Czechia, there are plausible markets for the supply of cow mozzarella and “other Italian-type hard cheese” that are affected, whereas in the Netherlands, there are plausible markets for buffalo mozzarella, burrata, cow mozzarella, Pecorino Romano, mascarpone and ricotta that are also affected. In addition, in Slovakia, there would be an affected market in the OOH channel when looking at Grana Padano and Parmigiano Reggiano as a distinct market. However, even under the narrowest plausible market definition, the increments brought about by the concentration are insignificant (less than [volume] sold annually with less than [0-5]% market share). As a result, the concentration does not bring a material change to these markets and on this basis the Commission finds that the concentration does not raise serious doubts concerning these markets. Furthermore, the Parties overlap in the market for the procurement of milk. However, this is not an affected market due to the Parties’ low combined market shares, and on this basis the Commission finds that the concentration does not raise serious doubts concerning this market.

(186)The relevance of Ambrosi was confirmed by a competitor of the Parties who explained that it “does not consider [Ambrosi] as a strong competitor in Gorgonzola” and that it “does not have any concerns in relation to the Gorgonzola market because Ambrosi sells Gorgonzola only in limited quantities and is not popular enough to create imbalances on the Gorgonzola market post-transaction.”

(187)Second, there are a number of alternative cheese suppliers currently available to Austrian customers, such as Igor and Zanetti. In addition to the competitors cited by the Parties, the Commission found through the market investigation an additional supplier of gorgonzola in Austria, Granarolo.

Third, the barriers to entry and expansion in the market for the supply of gorgonzola in Austria appear to be low.

With 181.12 tonnes of gorgonzola sold in Austria overall in 2021, the size of the market is relatively small. Thus, also suppliers of gorgonzola with lower output volumes could satisfy the need for gorgonzola in Austria. This also means that the Parties’ market positioning is not entrenched, as limited sales would allow competitors to capture large portions of the market and since the switch of an important customer could reshuffle market shares.

Ambrosi does not manufacture its own gorgonzola and does not have its own distribution infrastructure in Austria but relies on third-party distributors. This shows that it is possible to enter and expand in the supply of gorgonzola in Austria without having specific distribution capabilities in Austria and without having specific production capabilities for gorgonzola.

A number of competitors of the Parties have indicated that, in case of an increase of the demand for gorgonzola, they have the capacity to increase exports of gorgonzola or to start exporting gorgonzola to the whole EEA. This includes Granarolo, which is already supplying gorgonzola to Austria.

Switching suppliers of gorgonzola appears to be relatively easy from a logistical point of view since, due to the PDO requirements, these products must all be produced in a certain area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs. A competitor explained that it “normally uses distributors to sell its Gorgonzola abroad and either the distributor or the retailer puts together in one truck the products from different Italian suppliers to reduce their logistics costs.”

Fourth, whilst some of the responding customers indicated that the concentration would have a negative impact on the level of competition in the supply of Italian cheese in Austria, this view was not shared by all customers, as the same number of customers expressed the opposite view.

The Notifying Party argues that the concentration does not raise any competitive concerns for the following reasons: (i) the increment brought about as a result of the concentration is immaterial; (ii) the Parties are not close competitors (Ambrosi does not manufacture gorgonzola and sells [volume] in Belgium, whilst Lactalis sells [volume] which it produces itself); (iii) Ambrosi’s brand is of no relevance with regard to gorgonzola; (iv) the Parties will continue to face strong competition from Igor, Galileo, Ciesa, Mauri, Casarrigoni, Vivaldi and Defendi; (v) there are no significant barriers to entry and expansion; (vi) retailers can easily switch suppliers; (vii) there is competitive pressure from suppliers of similar cheeses; and (viii) retailers have a strong bargaining power.

The Commission finds the following:

First, the increment added to Lactalis’ market share through the concentration is only [0-5]% (with only [volume] of gorgonzola supplied by Ambrosi in 2021), which results in an HHI delta of less than 150 (approx. [0-50]). This is below the indicative threshold under which concentrations are generally presumed not to be liable of impeding effective competition. The limited relevance of Ambrosi was confirmed by a competitor who stated that it “does not consider [Ambrosi] as a strong competitor in Gorgonzola” and that it “does not have any concerns in relation to the Gorgonzola market because Ambrosi sells Gorgonzola only in limited quantities and is not popular enough to create imbalances on the Gorgonzola market post-transaction.”

Second, there are a number of alternative gorgonzola suppliers currently available to Belgian customers, notably Igor. In addition to this competitor cited by the Parties, the Commission found through the market investigation additional suppliers of gorgonzola in Belgium, namely Granarolo, Zanetti and Soster Fromaggi.

Third, the barriers to entry and expansion in the Belgian market for the supply of gorgonzola do not appear to be significant.

Ambrosi does not manufacture its own gorgonzola and does not have its own distribution infrastructure in Belgium but relies on third-party distributors. This shows that it is possible to enter and expand in the supply of gorgonzola in Belgium without having specific distribution capabilities in Belgium and without having specific production capabilities for gorgonzola.

However, customers’ and competitors’ views on barriers to entry are not uniform. With regard to how easy or difficult it is for customers to start importing cheese from an Italian manufacturer not yet supplying to Belgium, a majority of customers that expressed an opinion held that it was “medium” in terms of level of difficulty. By contrast, a majority of responding competitors believe that it would be difficult or very difficult for an Italian manufacturer of cheese not yet present in Belgium to start exporting cheese to Belgium. However, almost as many competitors held that it would be “easy” or “medium”. Furthermore, the Gorgonzola Consortium stated that it would be “neutral” in terms of difficulty for an Italian manufacturer of gorgonzola not yet present in Belgium to begin exporting to Belgium.

Nevertheless, a number of competitors of the Parties have indicated that, in case of an increase of the demand for gorgonzola, they have the capacity to increase exports or start exporting gorgonzola to the whole EEA. This includes a competitor that is already supplying gorgonzola in Belgium.

(197)Fourth, switching suppliers of gorgonzola appears to be relatively easy from a logistical point of view since, due to the PDO label requirements, these products must all be produced in a certain area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs. A competitor explained that it “normally uses distributors to sell its Gorgonzola abroad and either the distributor or the retailer puts together in one truck the products from different Italian suppliers to reduce their logistics costs.”

(198)Fifth, whilst some customers indicated that the concentration would have a negative impact on the level of competition in the supply of Italian cheese in Belgium, this view was not shared by all customers, as the same number of customers indicated that the impact would be neutral. Furthermore, none of the customers who responded that the impact would be negative expressed concerns specifically with regard to the supply of branded gorgonzola to the modern retail channel in Belgium. Moreover, whilst a slight majority of the competitors indicated that the concentration would have a negative impact on the level of competition in Belgium, almost the same number of competitors held that it would be neutral or positive. Also, none of the competitors who responded that the impact would be negative expressed concerns specifically with regard to the supply of branded gorgonzola to the modern retail channel in Belgium. A competitor active in the supply of gorgonzola in Belgium stated that “the transaction does not raise any concerns and may be even positive for the Italian cheese industry.” In addition, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies.

(199)In conclusion, in light of the above, the Commission finds that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded PDO gorgonzola to the modern retail channel in Belgium.

Questionnaire to competitors, question H.A.D.1.

Questionnaire to consortia, question G.E.1.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question C.A.3.

Minutes of a call with a competitor on 13 January 2023, paragraph 26.

Questionnaire to customers, question I.3.

Questionnaire to customers, question I.4.

Questionnaire to competitors, question I.3.

Questionnaire to competitors, question I.4.

Minutes of a call with a competitor on 13 January 2023, paragraph 24.

Questionnaire to customers, question I.3.

This shows that it is possible to enter and expand in the supply of taleggio in Belgium without having specific distribution capabilities in Belgium and without having specific production capabilities for taleggio.

However, as mentioned above, customers’ and competitors’ views on barriers to entry are not uniform. With regard to how easy or difficult it is for customers to start importing cheese from an Italian manufacturer not yet supplying to Belgium, a majority of customers that expressed an opinion held that it was “medium” in terms of level of difficulty. By contrast, a majority of responding competitors believe it would be difficult or very difficult for an Italian manufacturer of cheese not yet present in Belgium to start exporting cheese to Belgium. However, almost as many competitors held that it would be “easy” or “medium”.

Nevertheless, several competitors of the Parties have indicated that, in case of an increase of the demand for taleggio, they have the capacity to increase exports or start exporting taleggio to the whole EEA. This includes a competitor who is already supplying taleggio in Belgium.

Third, from a logistical point of view, switching suppliers of taleggio appears to be relatively easy since, due to the PDO requirements, these products are produced in a certain area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(206)Fourth, whilst some customers indicated that the concentration would have a negative impact on the level of competition in the supply of Italian cheese in Belgium, this view was not shared by all customers, as the same number of customers indicated that the impact would be neutral. Furthermore, none of the customers responding that the impact would be negative expressed concerns with regard to the supply of taleggio to the OOH channel in Belgium. Moreover, whilst a slight majority of the competitors indicated that the concentration would have a negative impact on the level of competition in Belgium, almost the same number of competitors held that it would be neutral or positive. Also, none of the competitors responding that the impact would be negative expressed concerns with regard to the supply of taleggio to the OOH channel in Belgium. In addition, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies.

Fifth, significant suppliers active in the sale of taleggio in Belgium, namely Zanetti, Granarolo and Igor, have indicated that it would be possible and easy for a supplier already selling cheeses to supermarkets to start selling to the Ho.Re.Ca channel. Hence, post-merger, with regard to Ho.Re.Ca customers, it appears as if the Parties would also face competitive constraint from competitors’ selling to the modern retail channel in Belgium. In conclusion, in light of the above, the Commission finds that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of taleggio to the OOH channel in Belgium.

6.3.3. Croatia

Based on the market share data submitted by the Parties, the concentration gives rise to horizontally affected markets in Croatia in relation to the cheese types Parmigiano Reggiano, Grana Padano, other Italian-type hard cheese and gorgonzola.

6.3.3.1. Parmigiano Reggiano

Based on the Parties’ market share estimates, their combined market shares in volume in 2021 are: (i) [80-90]% for the modern retail channel ([80-90]% Lactalis and [0-5]% Ambrosi); and (ii) [20-30]% for the OOH channel ([10-20]% Lactalis and [0-5]% Ambrosi).

The Notifying Party argues that the concentration does not raise any competitive concerns under any potential market definition for the following reasons: (i) the increment brought about as a result of the concentration is modest; (ii) there is competitive pressure from suppliers of similar cheeses; (iii) the combined entity will continue to face competition from a number of credible and well-established competitors including Zemaitijos Pienas, Parmareggio, Zarpellon, Paska Sirana, Latteria Soresina, Green Vie Foods, Biraghi, Meggle, Zanetti, Saviola, Interlat, Igor, Giglio, Colla, and Brazzale; (iv) the Parties cannot control the production of PDO Italian-type hard cheeses; (v) retailers can easily switch suppliers; (vi) there are no barriers to entry and expansion; and (vii) retailers have strong bargaining power.

6.3.3.1. All sales channels

The following assessment applies irrespective of the sales channel considered.

First, barriers to entry and expansion seem low in Croatia. The views of competitors on how easy or difficult entry into the Croatian market are not uniform. While two competitors consider entry difficult, three competitors consider it easy or very easy, including a major PDO Parmigiano Reggiano supplier in Croatia (Zanetti). Four others, three of which do not seem to be currently present in Croatia, consider it medium. For instance, another major PDO Parmigiano Reggiano supplier not yet active in Croatia, considers entry into Croatia to be neither easy nor difficult due to: (i) the competitiveness of the market; and (ii) the presence of importers that purchase products directly from Italy. This evidences the possibility for Croatian customers to have access to various Italian suppliers. Similarly, a majority of customers that expressed an opinion held the level of difficulty for customer to begin importing cheese from an Italian manufacturer not yet present in Croatia to be very low or medium.

Second, from a logistical point of view, switching suppliers of PDO Parmigiano Reggiano appears to be relatively easy for Croatian customers since, due to the PDO requirements, these products are all produced in a reduced area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

Third, PDO Parmigiano Reggiano suppliers will have spare and increasing capacity to export their production, especially to small target markets such as Croatia. Namely, eight competitors of the Parties have indicated that, in case of an increase of the demand for PDO Parmigiano Reggiano, they have the capacity to increase exports or start exporting PDO Parmigiano Reggiano to new EEA countries. This includes significant PDO Parmigiano Reggiano suppliers not yet present in Croatia, such as Granarolo, Ferrari Giovanni or Boni. They would all be able to export PDO Parmigiano Reggiano to the whole EEA. Significant PDO Parmigiano Reggiano suppliers already present in Croatia, like Zanetti or Saviola would also have spare capacity to increase exports to the EEA, including Croatia. In any case, Lactalis and Ambrosi have very low production shares in PDO Parmigiano Reggiano, leaving around [90-100]% available from other producers, as discussed in paragraph (16).

Fourth, the PDO Parmigiano Reggiano Consortium is very active in growing the markets for PDO Parmigiano Reggiano, and thus attracting new entrants, through promotional and marketing activities inside and, particularly, outside of Italy. This is also the case in Croatia, where according to a customer responding to the market investigation Colla for instance made its first entry into the Croatian market in the last three years, launching a Parmigiano Reggiano product. Over 60% of the Parmigiano Reggiano Consortium’s total annual budget (i.e., over EUR 30 million) is intended for investments to support product knowledge and to promote its consumption. Almost 50% of the promotional budget is directed to foreign markets outside of Italy. The Consortium’s promotional activities are two-fold:

Direct relations with importers and retailers to develop projects aimed at promoting the PDO Parmigiano Reggiano label, the range of PDO Parmigiano Reggiano products available and to boost consumption of PDO Parmigiano Reggiano. These activities include promotional measures and advertising in stores and through media.

Direct trade marketing projects of operators/exporters are also promoted through grants given to PDO Parmigiano Reggiano suppliers and exporters.

– In 2023, the Consortium allocated EUR 500,000 to support projects aimed at developing the sale of PDO Parmigiano Reggiano in Italy and abroad, benefitting dairies engaged in direct sales. The requirements for the project included: (i) expansion of a given product or supplier to new sales channels, (e.g. Ho.Re.Ca), sales platforms (e.g. online sales) or customers; (ii) increase the range of products offered and their penetration at points of sale (in terms of format, aging, biodiversity, innovation); or (iii) enhancing the role of PDO Parmigiano Reggiano as a ‘characterising ingredient’ in new industrial products (e.g. filled pasta).

– In 2023, the Consortium launched another project to support, among other things, investments in communication and advertising campaigns both inside and outside of Italy. The objective was to promote awareness and increase the sales of PDO Parmigiano Reggiano.

– In 2023, the Consortium allocated a budget of EUR 1.5 million to support extraordinary projects targeting: (i) the Ho.Re.Ca, industrial and Normal Trade sales channels; and (ii) the retail channel in export markets, in order to “promote the distinctiveness and uniqueness of the PDO Parmigiano Reggiano product”.

– In 2023, additional EUR 1.5 million were allocated by the Consortium to support projects aimed at large-scale distribution channels, including the industrial channel, both in Italy and abroad. The aim was to promote the distinctiveness and uniqueness of PDO Parmigiano Reggiano. Some of the initiatives supported by this campaign directly targeted the export market. For instance, the campaign covered projects aimed at “extensively and emotionally communicat[ing] the values of Parmigiano Reggiano on all touchpoints in compliance with the guidelines. Support the role of protagonist/hero and not just of ingredient (only for foreign projects)”.

– Between 2017 and 2019, at least, the Consortium also carried out “Export Projects” with the aim of “promoting and increasing awareness of the product through the increase of sales volumes of Parmigiano Reggiano PDO cheese in foreign markets”. Support was provided both financially and through the Consortium’s Marketing Agencies abroad.

(216) Fifth, whilst some customers indicated that the concentration would have a negative impact on the level of competition in the supply of Italian cheese in Croatia, this view was not shared by all customers, as the same number of customers indicated that the impact would be neutral. Furthermore, the majority of competitors that expressed an opinion indicated that the concentration would

See https://www.parmigianoreggiano.com/it/consorzio-progetti-commerciali-vendite-dirette-2023.

See https://www.parmigianoreggiano.com/it/consorzio-progetti-vendite-dirette-2023.

See https://www.parmigianoreggiano.com/it/consorzio-progetti-progetti-straordinari-2023.

See https://www.parmigianoreggiano.com/it/consorzio-progetti-progetti-speciali-2023.

See https://www.parmigianoreggiano.com/consortium-export-projects-2019.

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easily switch suppliers; (vii) there are no barriers to entry and expansion; and (viii) retailers have strong bargaining power.

(233) The Commission finds the following:

(234) First, the combined market share of the Parties in this channel is below the 25% indicative threshold under which concentrations are generally presumed not to be liable of impeding effective competition.

(235) Second, the increment brought by Ambrosi is due to minimal sales of PDO Grana Padano in Croatia in 2021 ([volume]).

(236) Third, after the concentration, the combined entity will continue to face significant competitive pressure from other competitors. According to the data provided by the Parties, in 2021 they faced competition from strong suppliers of Italian-type hard cheeses like Parmareggio, Latteria Soresina, Zanetti, Saviola, and Colla. Croatian customers and competitors have confirmed that Zanetti and Latteria Soresina are important suppliers of PDO Grana Padano in Croatia, and have additionally identified Trentin as a main supplier.

(237) Fourth, in addition to the competitors cited by the Parties and by respondents in the market investigation, another Italian cheese supplier, Cepparo, submitted that it sells PDO Grana Padano in Croatia.

(238) Fifth, barriers to entry and expansion seem low in Croatia also for PDO Grana Padano. On the one hand, as explained in the previous section, the views of competitors on how easy or difficult entry into the Croatian market are not uniform. While two competitors consider entry difficult, three competitors consider it easy or very easy, including two suppliers that do not seem to be currently active in Croatia and a major PDO Grana Padano supplier in Croatia (Zanetti). Four others, three of which do not seem to be currently present in Croatia, consider it medium. Similarly, a majority of customers that expressed an opinion held that the level of difficulty for customers to begin importing cheese from an Italian manufacturer not yet present in Croatia is very low or medium.

(239) Sixth, from a logistical point of view, switching suppliers of PDO Grana Padano appears to be relatively easy for Croatian customers since, due to the PDO requirements, these products are all produced in a reduced area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(240) Seventh, six competitors of the Parties have indicated that, in case of an increase of the demand for PDO Grana Padano, they have the capacity to increase exports or start exporting PDO Grana Padano to new EEA countries. This includes significant PDO Grana Padano suppliers not yet present in Croatia, such as Boni, Saviola or Ferrari Giovani. They would all be able to export PDO Grana Padano to the whole EEA. Zanetti would also have spare capacity to increase its exports of PDO Grana Padano to the EEA, including Croatia, in case of a demand increase.

(241) Eighth, the PDO Grana Padano Consortium also plays an important role in growing the markets for PDO Grana Padano and thus attracting new entrants by promoting this product outside of Italy, including in the EEA. This is also the case in Croatia, where Colla for instance made its first entry into the Croatian market in recent years, selling a range of Italian-type hard cheeses including Grana Padano. The aim is to increase the knowledge about the product and its consumption abroad. The Consortium’s overall marketing budget, for Italy and abroad, is EUR 43 million for 2023 and includes extensive promotional campaigns through various media and across several countries. The target countries for 2023 include several EEA countries such as Germany, France, Spain and Belgium.

(242) Ninth, whilst some customers indicated that the concentration would have a negative impact on the level of competition in the supply of Italian cheese in Croatia, this view was not shared by all customers, as the same number of customers indicated that the impact would be neutral. Furthermore, the majority of competitors that expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Croatia. In addition, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies.

(243) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market on the market for the supply of PDO Grana Padano to the modern retail channel in Croatia.

6.3.3.3. Other Italian-type hard cheese

(244) Based on the Parties’ market share estimates, their combined market shares in volume in 2021 are: (i) [40-50]% for the modern retail channel ([40-50]% Lactalis and [0-5]% Ambrosi); and (ii) [20-30]% for the industrial and Ho.Re.Ca channel ([20-30]% Ambrosi and [0-5]% Lactalis).

(245) The Notifying Party argues that the concentration does not raise any competitive concerns under any potential market definition for the following reasons: (i) the increment brought about as a result of the concentration is modest; (ii) the size of the market is small; (iii) there is competitive pressure from suppliers of similar cheeses; (iv) the combined entity will continue to face competition from a number of credible and well-established competitors including Zemaitijos Pienas, Parmareggio, Zarpellon, Paska Sirana, Latteria Soresina, Green Vie Foods, Biraghi, Meggle, Zanetti, Saviola, Interlat, Igor, Giglio, Colla, and Brazzale; (v) the Parties cannot control the production of PDO Italian-type hard cheeses; (vi) retailers can easily switch suppliers; (vii) there are no barriers to entry and expansion; and (viii) retailers have strong bargaining power.

6.3.3.3.1. All sales channels

(246) The following assessment applies irrespective of the sales channel considered.

(247) First, barriers to entry and expansion seem low in Croatia also for other Italian-type hard cheese. As explained in Section 6.3.3.1.1, the views of competitors on how easy or difficult entry into the Croatian market are not uniform. While two competitors consider entry difficult, three competitors consider it easy or very easy, including two suppliers that do not seem to be currently active in Croatia and a major supplier of other Italian-type hard cheeses (Zanetti). Four others, three of which do not seem to be currently present in Croatia, consider it medium. Similarly, a majority of customers that expressed an opinion held that the level of difficulty for customers to begin importing cheese from an Italian manufacturer not yet present in Croatia is very low or medium.

(248) Second, five competitors of the Parties have indicated that, in case of an increase of the demand for other Italian-type hard cheeses, they have the capacity to increase exports or start exporting other Italian-type hard cheeses to new EEA countries. This includes significant suppliers of other Italian-type hard cheeses not yet present in Croatia, such as Granarolo, Saviola or Boni. They would all be able to export other Italian-type hard cheeses to the whole EEA. Zanetti, a significant supplier of other Italian-type hard cheeses in Croatia, and Biraghi would also have spare capacity to increase exports to the EEA, including Croatia.

(249) Third, whilst some customers indicated that the concentration would have a negative impact on the level of competition in the supply of Italian cheese in Croatia, this view was not shared by all customers, as the same number of customers indicated that the impact would be neutral. Furthermore, the majority of competitors that expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the supply of Italian cheese in Croatia. In addition, a majority of customers and competitors having expressed

Form CO, paragraph 1010, and Parties’ response to RFI 7, paragraph 6.1.

Questionnaire to competitors, question H.B.C.1.

Questionnaire to customers, question H.B.D.1.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question H.M.9.

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would allow competitors to capture large portions of the market and since the switch of an important customer could reshuffle market shares.

(b) Furthermore, Ambrosi does not manufacture gorgonzola and does not have its own distribution infrastructure in Croatia but relies on third-party distributors. This shows that it is possible to enter and expand the supply of gorgonzola in Croatia without having specific distribution capabilities in Croatia and without having specific production capabilities for gorgonzola.

(c) As explained above, the views of competitors on how easy or difficult it is to enter the Croatian market are not uniform. While two competitors consider entry difficult, three competitors consider it easy or very easy, including two suppliers that do not seem to be currently active in Croatia. Four others, three of which do not seem to be currently present in Croatia, consider it medium. For instance, a supplier not yet active in Croatia considers entry into Croatia to be neither easy nor difficult due to: (i) the competitiveness of the market; and (ii) the presence of importers that purchase products directly from Italy. This evidences the possibility for Croatian customers to have access to various suppliers. Similarly, a majority of customers that expressed an opinion held that the level of difficulty for customer to begin importing cheese from an Italian manufacturer not yet present in Croatia is very low or medium.

(d) Several competitors of the Parties have indicated that, in case of an increase of the demand for gorgonzola, they have the capacity to increase exports or start exporting gorgonzola to the whole EEA.

(266) Fourth, switching suppliers of gorgonzola appears to be relatively easy from a logistical point of view since, due to the PDO requirements, these products are all produced in a certain area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs. A competitor explained that it “normally uses distributors to sell its Gorgonzola abroad and either the distributor or the retailer puts together in one truck the products from different Italian suppliers to reduce their logistics costs.”

(267) Fifth, whilst some customers indicated that the concentration would have a negative impact on the level of competition in the supply of Italian cheese in Croatia, this view was not shared by all customers, as the same number of customers indicated that the impact would be neutral. When the customers were asked about why the impact would be negative in Croatia, concerns were expressed about other types of cheeses and there was no mention of gorgonzola. Furthermore, the majority of competitors that expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the

Form CO, paragraph 54; Response to PN RFI 4, paragraph 11.6.

Questionnaire to competitors, question H.B.C.1.

Questionnaire to customers, question H.B.D.1.

Questionnaire to competitors, question H.M.9.

52

easily switch suppliers; (vi) there are no barriers to entry and expansion; and (vii) retailers have strong bargaining power.

(272) High combined market shares such as those found in the present market, [80-90]%, are normally a prima facie indicator that the Parties’ have significant market power. However, certain qualitative factors present in this market, particularly relating to the ease of entry and expansion by other producers and suppliers of this cheese as well as about other suppliers already present in this market, and the fact that the Parties have a relatively low share in the overall production of the cheese they sell in this market, indicate that the Parties’ estimated market share is likely to significantly overstate the Parties’ actual market power in this specific market. Moreover, the Commission’s investigation indicates that the acquisition of Ambrosi by Lactalis does not raise competition concerns in relation to Parmigiano Reggiano in Denmark. In particular, the Commission has examined the following factors:

(273) First, the Parties’ estimates may overestimate their market position, in light of the results of the market investigation. While the views of customers differ on the estimated combined market share of the Parties for the supply of PDO Parmigiano Reggiano in Denmark, customers consider that the combined market share does not exceed [60-70]% and some customers mention a share as low as [40-50]%.

(274) Second, after the concentration, the combined entity will continue to face significant competitive pressure from other competitors currently active in the Danish market.

(275) There are a number of alternative cheese suppliers currently available to Danish customers. Namely, a considerable volume of Lactalis’ sales in Denmark correspond to the resale of a competitor’s products. In 2021, [20-30]% of its sales of PDO Parmigiano Reggiano in Denmark were Zanetti’s products. According to customers and competitors, Zanetti’s products are known to Danish customers and successfully sold in this country and could thus act as a strong independent competitor to the Parties in this market should they decide to raise the price of Parmigiano Reggiano in Denmark post-transaction. To this end, Zanetti confirms that its products are well recognised by consumers in Denmark and claims that it would not be problematic, time-consuming or costly to find an alternative distributor for the Danish market, other than Lactalis.

(276) In addition to the Parties and Zanetti (through Lactalis’ distribution network), another Italian supplier, Savencia, also supplies limited quantities of PDO Parmigiano Reggiano in Denmark and is considered by some customers as the main alternative to Lactalis in Denmark. An additional significant supplier of PDO Parmigiano Reggiano, Granarolo, has also submitted that it sells this product in Denmark. Danish customers have also identified Wenersson, which distributes Parmareggio’s PDO Parmigiano Reggiano in the Nordics, as a main supplier of PDO Parmigiano Reggiano in Denmark.

(277) Third, a number of strong competitors of the Parties are active in the supply of PDO Parmigiano Reggiano in neighbouring markets (Norway, Sweden, Finland and Germany) and could enter the Danish market. On the one hand, a majority of competitors submit that there are no or no particularly significant differences between consumer preferences and conditions of competition for the supply of Italian cheeses across Denmark, Sweden, Norway and Finland. On the other hand, although the views of market participants are not uniform, a slight majority of respondents submit that, in the event of a lasting and significant (5-10%) increase in the wholesale price for PDO Parmigiano Reggiano in Denmark, customers are likely or very likely to start importing PDO Parmigiano Reggiano from alternative suppliers currently not supplying in Denmark. PDO Parmigiano Reggiano competitors active in neighbouring countries include: (i) in Germany, Granarolo, Zanetti, Ferrari Giovanni, Cepparo and Produttori latte associate Cremona Soc. Coop.; (ii) in Sweden, Granarolo, Zanetti and Tine; and (iii) in Norway, Zanetti; (iv) in Finland, Ferrari Giovani, Produttori latte associati Cremona, Granarolo and Zanetti. Namely, Tine confirms that it would be easy to enter the Danish market and Zanetti submits that it would not be problematic, time-consuming or costly to find an alternative distributor for the Danish market.

(278) Fourth, Parmigiano Reggiano suppliers will have spare and increasing capacity to export their production. Namely, eight competitors of the Parties have indicated that they would have the spare capacity and willingness to increase their exports or start exporting their PDO Parmigiano Reggiano across the EEA, including Denmark, should there be an increase in demand. This includes significant PDO Parmigiano Reggiano suppliers not yet present in Denmark, such as Ferrari Giovanni, Saviola or Boni. They would all be able to export PDO Parmigiano Reggiano to the whole EEA. Significant PDO Parmigiano Reggiano suppliers already present in Denmark, like Zanetti or Granarolo would also have spare capacity to increase exports to the EEA, including Denmark. According to a main retail distributor in Denmark, it would also be easy for Parmareggio, an important competitor not yet present in Denmark, to enter the market and eventually replace Ambrosi’s volumes post-concentration.

(279) Fifth, when asked who they would buy PDO Parmigiano Reggiano from if they could not buy from Lactalis, Danish customers mentioned Wenersson (distributing Parmareggio’s products in Denmark, Sweden, Norway and Finland), Zanetti and Savencia as alternatives. The same suppliers were identified by Danish customers when asked who they would turn to in case they could not buy their PDO Parmigiano Reggiano from Ambrosi.

Questionnaire to customers, question H.C.A.1.

Questionnaire to customers, question H.C.A.5-1.

55

(280) Sixth, the few Danish customers that expressed a view concerning the possibility to resort to imports in case of price increases for PDO Parmigiano Reggiano replied that they would likely start importing Parmigiano Reggiano from alternative suppliers currently not supplying in Denmark to offset the price increase.

(281) Seventh, barriers to entry and expansion do not seem particularly high in Denmark:

(a) The views of market participants on how easy or difficult entry into the Danish market is are not uniform. While five competitors and customers consider entry difficult or very difficult, five other customers consider it easy. Five other customers and competitors consider it medium. Namely, a customer explained that it would be easy: (i) for distributors in Denmark to “import” Parmigiano Reggiano products sold in neighbouring countries, namely Sweden; and (ii) for Italian suppliers of these products to use the same distributor in several Nordic countries. Zanetti in particular, while it submits that the difficulty level to enter the Danish market is medium, also claims that it would not be problematic, time-consuming or costly to find an alternative distributor for the Danish market.

(b) Despite the small size of the Danish cheese market, entry still seems commercially attractive and cost-efficient given that cheese suppliers do not need to: (i) pay for a whole truck to transport the products all the way to Denmark from Italy; or (ii) fill up the truck with cheese products. This is the case since it seems that in Denmark it is common practice for wholesalers to import a whole portfolio of Italian specialty products (olive oil, pasta, PDO cheese, etc.) given the overall small size of this market. Logistically it is easy for them to source Parmigiano Reggiano from alternative small suppliers. Hence, even suppliers of Parmigiano Reggiano with lower output volumes or economic constraints could satisfy the needs of Danish wholesalers or to replace Ambrosi’s sales volume ([volume] in 2021).

(c) It also appears that finding a Danish distributor is not a high barrier to enter the Danish market for Italian cheese suppliers. A market participant also highlighted the intermediation role of the Italian embassy in Denmark, which facilitates the expansion of Italian businesses into the Nordic countries, often by putting Italian manufacturers in contact with Danish distributors.

(d) As explained in paragraph (215), the PDO Parmigiano Reggiano Consortium is also very active in growing the markets for Parmigiano Reggiano and thus attracting new entrants, by promoting the knowledge and use of PDO Parmigiano Reggiano abroad, including through financial contributions to suppliers targeting the export markets, as well as direct relations with importers and retailers to develop projects aimed at promoting the PDO

Questionnaire to customers, question H.C.A.6-1.

Questionnaire to customers, question H.C.A.7.

Questionnaire to customers, question H.C.A.1, questionnaire to competitors, question H.C.A.1.

Minutes of the call with a customer on 3 February 2023, para. 16.

Minutes of the call with a competitor on 4 January 2023, para. 29.

Minutes of the calls with a competitor on 16 January 2023, para. 21, with a customer on 3 February 2023, para. 23.

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Parmigiano Reggiano label, the range of PDO Parmigiano Reggiano products available and to boost consumption of PDO Parmigiano Reggiano.

(282) Eighth, from a logistical point of view, switching suppliers of PDO Parmigiano Reggiano appears to be relatively easy for Danish customers since, due to the PDO requirements, these products are all produced in a reduced area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(283) Ninth, Lactalis’ approach to previous acquisitions shows that it keeps the distribution system of its subsidiaries separate post-concentration. For instance, after its acquisition, Lactalis maintained Nuova Castelli’s distribution network separate and, particularly in Denmark, Nuova Castelli seems to use an independent distributor and not Lactalis’ network. Hence, judging by Lactalis’ approach to previous acquisitions, any concerns around Ambrosi potentially ceasing to supply Danish distributors in favour of Lactalis’ distribution network do not seem likely.

(284) Tenth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Denmark. None of the customers and competitors who responded that the impact would be negative have expressed concerns specifically with regard to the supply of PDO Parmigiano Reggiano in Denmark.

(285) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market on the market for the supply of PDO Parmigiano Reggiano to the modern retail channel in Denmark.

6.3.4.2. Grana Padano

(286) Based on the Parties’ market share estimates, their combined market share in volume in 2021 is [90-100]% for the modern retail channel ([70-80]% Lactalis and [20-30]% Ambrosi).

Minutes of the call with a competitor on 13 January 2023, para. 24; with a customer on 3 February 2023, para. 28; with a competitor on 4 January 2023, para. 8.

Minutes of the call with a competitor on 4 January 2023, para. 8.

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(292) In addition to the Parties and Zanetti (through Lactalis’ distribution network), an additional significant supplier of PDO Grana Padano, Granarolo, has also submitted that it sells this product in Denmark. Other PDO Grana Padano suppliers, Tine SA and Produttori latte associati Cremona, have also confirmed that they sell this product in Denmark. Danish customers have also identified Wenersson, which distributes in the Nordic countries the PDO Grana Padano of Michelangelo, as a main supplier of PDO Grana Padano in Denmark.

(293) Third, a number of strong competitors of the Parties are active in the supply of PDO Grana Padano in neighbouring markets (Norway, Sweden, Finland and Germany) and could easily and promptly enter the Danish market. On the one hand, a majority of competitors submit that there are no or no particularly significant differences between consumer preferences and conditions of competition for the supply of Italian cheeses across Denmark, Sweden, Norway and Finland. On the other hand, a majority of respondents submit that, in the event of a lasting and significant (5-10%) increase in the wholesale price for PDO Grana Padano in Denmark customers are likely or very likely to start importing PDO Grana Padano from alternative suppliers currently not supplying in Denmark. PDO Grana Padano competitors active in neighbouring countries include: (i) in Germany, Zanetti, Ferrari Giovanni, Cepparo, Produttori latte associate Cremona and Soster Formaggi; (ii) in Sweden, Granarolo, Zanetti, Tine and Produttori latte associate Cremona; (ii) in Norway, Zanetti and (iii) in Finland, Ferrari Giovani, Produttori latte associati Cremona, Granarolo and Zanetti.

(294) Fourth, six competitors of the Parties have indicated that they would have the spare capacity and willingness to increase their exports or start exporting their PDO Grana Padano across the EEA, including Denmark, should there be an increase in demand. This includes significant PDO Grana Padano suppliers not yet present in Denmark, such as Saviola or Boni. They would all be able to export PDO Grana Padano to the whole EEA. Significant PDO Grana Padano suppliers already present in Denmark would also have spare capacity to increase exports to the EEA, including Denmark. One major supplier explained that it is in the process of expanding its production capacity for the manufacture of PDO Grana Padano by 15%-20% to respond to demand increases in recent years.

Minutes of the calls with a customer on 3 February 2023, para. 10, and with a competitor on 4 January 2023, paras. 4 and 14.

(295) Fifth, when asked who they would buy PDO Grana Padano from if they could not buy from Lactalis, Danish customers mentioned Wenersson (distributing Michelangelo’s products in the Nordic countries), Zanetti and Savencia as alternatives. Zanetti and Savencia were also identified by Danish customers when asked who they would turn to in case they could not buy their PDO Grana Padano from Ambrosi.

Questionnaire to customers, question H.C.B.5-1.

Questionnaire to customers, question H.C.B.6-1.

55

(296) Sixth, the few Danish customers that expressed a view concerning the possibility to resort to imports in case of a lasting and significant (5-10%) price increase for PDO Grana Padano mostly replied that they would likely or very likely import PDO Grana Padano from a supplier not yet present in Denmark to offset the price increase.

(297) Seventh, barriers to entry and expansion do not seem particularly high in Denmark:

(a) The views of market participants on how easy or difficult entry into the Danish market is are not uniform. While five competitors and customers consider entry difficult or very difficult, five other customers consider it easy. Five other customers and competitors consider it medium. Namely, a customer explained that it would be easy: (i) for distributors in Denmark to “import” PDO Grana Padano products sold in neighbouring countries, namely Sweden; and (ii) for Italian suppliers of these products to use the same distributor in several Nordic countries. Zanetti in particular, while it submits that the difficulty level to enter the Danish market is medium, also claims that it would not be problematic, time-consuming or costly to find an alternative distributor for the Danish market.

(b) Despite the small size of the Danish cheese market, entry still seems commercially attractive and cost-efficient given that cheese suppliers do not need to: (i) pay for a whole truck to transport the products all the way to Denmark from Italy; or (ii) fill up the truck with cheese products. This is the case since it also seems that in Denmark, it is common practice for wholesalers to import a whole portfolio of Italian specialty products (olive oil, pasta, PDO cheese, etc.) given the overall small size of this market. Logistically it is easy for them to source Parmigiano Reggiano from alternative small suppliers. Hence, even suppliers of Grana Padano with lower output volumes could satisfy the needs of Danish wholesalers or to replace Ambrosi’s sales volume ([volume] in 2021).

(c) It also appears that finding a Danish distributor is not a high barrier to enter the Danish market for Italian cheese suppliers. A market participant also highlighted the intermediation role of the Italian embassy in Denmark, which facilitates the expansion of Italian businesses into the Nordic countries, often by putting Italian manufacturers in contact with Danish distributors.

Minutes of the call with a competitor on 4 January 2023, para. 27.

Questionnaire to customers, question H.C.B.5-1.

Questionnaire to customers, question H.C.B.6-1.

Questionnaire to customers, question H.C.B.7.

(299) Ninth, Lactalis’ approach to previous acquisitions shows that it keeps the distribution system of its subsidiaries separate post-concentration. For instance, after its acquisition, Lactalis maintained Nuova Castelli’s distribution network separate and, particularly in Denmark, Nuova Castelli seems to use an independent distributor and not Lactalis’ network. Hence, judging by Lactalis’ approach to previous acquisitions, any concerns around Ambrosi potentially ceasing to supply Danish distributors in favour of Lactalis’ distribution network does not seem likely.

(300) Tenth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Denmark. None of the customers and competitors who expressed an opinion and responded that the impact would be negative have expressed concerns specifically (i.e. not specifically for Denmark) with regard to the supply of PDO Grana Padano in Denmark. Just one competitor of the Parties expressed that the combination of the Parties could generally result in higher prices of PDO Grana Padano due to the Parties’ increased power to influence the price of milk used in the production of Grana Padano. However, as explained in Section 4, the Parties’ combined sales of PDO Grana Padano (including sales of third-party produced cheese that is resold by the Parties) represent less [5-10]% respectively of the overall production of these two cheeses and, therefore, it appears unlikely that the merged entity would have the ability to influence the price of milk used in the production of PDO Grana Padano and, as a consequence, the price of PDO Grana Padano sold to consumers.

(301) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market on the market for the supply of PDO Grana Padano to the modern retail channel in Denmark.

6.3.4.3. Pecorino Romano

(302) Based on the Parties’ market share estimates, their combined market share in volume in 2021 is [90-100]% for the modern retail channel ([80-90]% Lactalis and [5-10]% Ambrosi).

Minutes of the call with a competitor on 13 January 2023, para. 24; with a customer on 3 February 2023, para. 28; with a competitor on 4 January 2023, para. 8.

Minutes of the call with a competitor on 4 January 2023, para. 8.

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(308) Fourth, barriers to entry and expansion seem low in Denmark also for PDO Pecorino Romano. On one hand, as explained paragraph (281), the views of market participants on how easy or difficult entry into the Danish market is are not uniform. While five competitors and customers consider entry difficult or very difficult, five other customers consider it easy. Five other customers and competitors consider it medium. In particular Zanetti considers that timely and cost-effective entry is possible in Denmark. On the other hand, with only 29.7 tonnes of PDO Pecorino Romano sold in Denmark overall in 2021, according to the Parties’ estimate, the size of the market is small. Ambrosi’s sales volume in Denmark amounting to only [volume] in 2021 is also small for PDO Pecorino Romano. Thus, also suppliers of PDO Pecorino Romano with lower output volumes could satisfy the need for this product in Denmark.

(309) Fifth, from a logistical point of view, switching suppliers of PDO Pecorino Romano appears to be relatively easy for Danish customers since, due to the PDO requirements, these products are all produced in a reduced area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(310) Sixth, three competitors of the Parties have indicated that, in case of an increase of the demand for PDO Pecorino Romano, they have the capacity to increase exports or start exporting PDO Pecorino Romano to new EEA countries, including Denmark. This includes significant PDO Pecorino Romano suppliers not yet present in Denmark, such as Saviola or Ferrari Giovani. They would all be able to export PDO Pecorino Romano to the whole EEA. Granarolo would also have spare capacity to increase its exports of PDO Pecorino Romano to the EEA, including Denmark, in case of a demand increase.

(311) Seventh, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Denmark.

(312) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market on the market for the supply of PDO Pecorino Romano to the modern retail channel in Denmark.

6.3.4.4. Other Italian-type hard cheese

(313) Based on the Parties’ market share estimates, their combined market share in volume in 2021 is [90-100]% for the modern retail channel ([80-90]% Lactalis and [10-20]% Ambrosi).

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question H.M.9.

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(319) Fourth, five competitors of the Parties have indicated that, in case of an increase of the demand for other Italian-type hard cheeses, they have the capacity to increase exports or start exporting other Italian-type hard cheeses to new EEA countries, including Denmark. This includes significant suppliers of other Italian-type hard cheeses not yet present in Denmark, such as Saviola, Biraghi or BMI. They would all be able to export other Italian-type hard cheeses to the whole EEA. Zanetti and Granarolo, significant suppliers of other Italian-type hard cheeses in Denmark, would also have spare capacity to increase exports to the EEA, including Denmark.

(320) Fifth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Denmark.

(321) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market on the market for the supply of other Italian-type hard cheeses to the modern retail channel in Denmark.

6.3.4.5. Cow mozzarella

(322) Both Lactalis and Ambrosi supply branded and private label cow mozzarella in the modern retail channel in Denmark.

6.3.4.5.1. Branded

(323) As shown in Table 14, the combined market share of the Parties in the supply of branded cow mozzarella to the modern retail channel in Denmark is equal to [20-30]% whereas the increment from Ambrosi is equal to less than [0-5]%. The Notifying Party has estimated that Arla Foods constitutes [50-60]% of the remaining share, whereas Zott and Falengreen are attributed [10-20]% and [5-10]% of market share, respectively. The Notifying Party was unable to allocate [0-5]% of market share to any specific competitor.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question H.M.9.

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(343) While high combined market shares together with a material market share increment, such as in the present market, are normally a prima facie indicator that the Parties’ have significant market power, certain qualitative factors present in this market, particularly relating to the ease of entry and expansion by other producers and suppliers of this cheese as well as about other suppliers already present in this market, and the fact that the Parties have a relatively low share in the overall production of the cheese they sell in this market, indicate that the Parties’ estimated market share is likely to significantly overstate the Parties’ actual market power in this specific market. In particular, the Commission has examined the following factors:

(344) First, although the combined market share as estimated by the Parties is high, the increment added by Ambrosi’s market share through the concentration would be limited to only [volume] of cheese supplied per year. In this regard, it should be noted that none of the customers and competitors that expressed their opinion in the market investigation listed Ambrosi as one of the main suppliers of branded or private label buffalo mozzarella.

(345) Second, the Parties will continue to face competition from other suppliers of branded buffalo mozzarella in Denmark. In addition to Lactalis, customers in the market investigation identified Zanetti, Savencia and Wernersson as the main suppliers of branded buffalo mozzarella to retailers in Denmark. Further, the Italian cheese manufacturers and suppliers Granarolo and Zanetti confirmed that they already supply own-manufactured buffalo mozzarella to customers in Denmark, whereas the Norwegian dairy manufacturer and distributor TINE SA stated that it already supplies third-party manufactured buffalo mozzarella to customers in Denmark.

(346) Third, upstream the Parties only produce a relatively limited amount of the total volume of buffalo mozzarella sold in the EEA and elsewhere. In particular, Lactalis’ production share for Italian produced buffalo mozzarella was equal to only around [5-10]% in 2022, whereas Ambrosi does not produce buffalo mozzarella at all and instead only resells buffalo mozzarella produced by third parties. Therefore, the concentration will not result in a bottleneck at the production level and retail customers in Denmark will continue to be able to import buffalo mozzarella from a range of manufacturers independent from the Parties.

(347) Fourth, the barriers to entry and expansion in the supply of branded buffalo mozzarella in Denmark appear to be low.

(a) With only 56 tonnes of branded buffalo mozzarella sold in Denmark overall in 2021, the size of the market is small. Thus, also suppliers of buffalo mozzarella with lower output volumes could satisfy the need for buffalo mozzarella in Denmark.

(b) The market investigation supports that there are no significant barriers to entry. A majority of competitors having expressed an opinion found that the level of difficulty for an Italian manufacturer of cheese not yet present in Denmark to start exporting its cheese to Denmark, when considering all eventual barriers to entry, is “very easy”, “easy” or “medium”. Similarly, a majority of customers that expressed their opinion held that the level of difficulty for a customer to begin importing cheese from an Italian manufacturer not yet present in Denmark is “easy” or “medium”.

(c) Two of the largest food retailers in Denmark stated during the market investigation that they found it “likely” or “very likely” that customers (such as themselves) would start importing buffalo mozzarella from alternative suppliers currently not supplying in Denmark to offset a lasting and significant increase in the wholesale price for buffalo mozzarella in Denmark. One of these retailers further listed Italian cheese-manufacturer Ghidetti as the main alternative supplier of buffalo mozzarella currently not yet being sold in Denmark that could be imported at relatively low cost.

(d) In this regard, one large Danish food retailer explained that “it is possible for retailers to start distributing cheese products from Italian manufacturers not yet present in the country. [Our company] has done it in the past for specialty products. It is therefore not necessary for these manufacturers to have their own distribution networks and […] there are third-party distributors that could distribute Italian cheese products in Denmark. The Italian embassy also helps Italian manufacturers to supply their specialty products in the Nordics, namely, by helping them build relationships with distributors and customers.”

(e) Ambrosi itself does not manufacture its own buffalo mozzarella and relies on a third-party distributor in Denmark. This shows that it is possible to enter and expand in the supply of buffalo mozzarella in Denmark without having specific distribution capabilities in Denmark and without having specific production capabilities for buffalo mozzarella.

(f) Several large manufacturers of branded buffalo mozzarella have indicated that, in case of an increase of the demand for buffalo mozzarella, they have the capacity to increase exports or start exporting buffalo mozzarella to new EEA countries.

(348) Fifth, the Parties will continue to face out-of-market constraints from several large suppliers of cow mozzarella, including Arla Foods, Zott, Falengreen, Granarolo, Zanetti and TINE SA (see Section 6.3.4.5). While most consumers do not see cow mozzarella and buffalo mozzarella as close substitutes, it is likely that there are marginal customers that would substitute away from the Parties’ buffalo

However, it should be noted that the small size of the Danish market for buffalo mozzarella may also negatively affect the incentives to enter this market by manufacturers and other suppliers currently not yet active in Denmark.

Questionnaire to competitors, question H.C.H.1.

Questionnaire to customers, question H.C.H.1.

Questionnaire to customers, question H.C.E.8.

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(355) While high combined market shares together with a material market share increment, such as in the present market, are normally a prima facie indicator that the Parties’ have significant market power, certain qualitative factors present in this market, particularly relating to the ease of entry and expansion by other producers and suppliers of this cheese as well as about other suppliers already present in this market, and the fact that the Parties have a relatively low share in the overall production of the cheese they sell in this market, indicate that the Parties’ estimated market share is likely to significantly overstate the Parties’ actual market power in this specific market. In particular, the Commission has examined the following factors:

(356) First, even though the Notifying Party estimates the Parties’ combined market share as close to [90-100]%, the market investigation suggests that, contrary to the Parties’ market share estimates, the Parties will continue to face competition from existing other suppliers of branded and private label mascarpone in Denmark. While customers only identified Lactalis and Ambrosi as currently supplying mascarpone (branded or private label) in Denmark, the large and established Italian cheese manufacturers Granarolo and Zanetti indicated that they currently already supply mascarpone to Denmark. Further, the Norwegian dairy manufacturer and distributor TINE SA stated that it already supplies mascarpone to customers in Denmark. Therefore, the market shares as estimated by the Notifying Party are likely to overstate the Parties’ competitive position in this market.

(357) Second, upstream the Parties only produce a relatively limited amount of the total volume of mascarpone sold in the EEA and elsewhere. In particular, Lactalis’ production share for Italian produced mascarpone was equal to only around [10-20]% in 2022, whereas Ambrosi does not produce mascarpone at all and instead only resells mascarpone produced by third-parties. Therefore, the concentration will not result in a bottleneck at the production level and retail customers in Denmark will continue to be able to import mascarpone from a range of manufacturers independent from the Parties.

(358) Third, the barriers to entry and expansion in the supply of branded mascarpone in Denmark appear to be low:

(a) With only 260 tonnes of branded mascarpone sold in Denmark to modern retailers in 2021, the size of the market is small. Thus, also suppliers of mascarpone with lower output volumes could satisfy the need for mascarpone in Denmark.

(b) The market investigation supports that there are no significant barriers to entry. A majority of competitors having expressed an opinion found that the level of difficulty for an Italian manufacturer of cheese not yet present in Denmark to start exporting its cheese to Denmark, when considering all eventual barriers to entry, is “very easy”, “easy” or “medium”. Similarly, a majority of customers that expressed their opinion held that the level of difficulty for a customer to begin importing cheese from an Italian manufacturer not yet present in Denmark is “easy” or “medium”.

(c) The only customer that expressed an opinion on this matter, a large Danish retailer, stated that they found it very likely that customers would start importing mascarpone from alternative suppliers currently not supplying in Denmark to offset a lasting and significant increase in the wholesale price for mascarpone in Denmark.

(d) As previously stated, one large Danish food retailer explained that “it is possible for retailers to start distributing cheese products from Italian manufacturers not yet present in the country. [Our company] has done it in the past for specialty products. It is therefore not necessary for these manufacturers to have their own distribution networks and […] there are third-party distributors that could distribute Italian cheese products in Denmark. The Italian embassy also helps Italian manufacturers to supply their specialty products in the Nordics, namely, by helping them build relationships with distributors and customers.”

(e) Four large Italian manufacturers of mascarpone stated that, in case of an increase of demand for mascarpone, they have the capacity to increase exports or start exporting mascarpone to the whole of the EEA, including Denmark.

(f) The Parties have a significantly smaller market position in the supply of branded mascarpone to the modern retail channel in geographically close markets, including in Germany (combined market share is equal to [5-10]%) and Sweden (combined market share is equal to [30-40]%). This suggests that in these neighbouring countries, a large proportion of branded mascarpone is already supplied by competitors to the Parties. Customers would be able to import these alternative branded mascarpone products that are already being successfully sold in Germany and Sweden without having to rely on significantly different or more expensive distribution arrangements.

(g) Ambrosi itself does not manufacture its own mascarpone and relies on a third-party distributor (Geia) in Denmark. This example shows that it is possible to enter and expand in the supply of branded mascarpone in Denmark without having specific distribution capabilities in Denmark and without having specific production capabilities for mascarpone.

(359) Fourth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Denmark. In addition, none of the customers and competitors that expressed a negative opinion on the concentration specifically mentioned the effects on the supply of mascarpone in Denmark.

(360) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal

Questionnaire to customers, question H.C.H.1.

Questionnaire to customers, question H.C.F.7.

Minutes of a call with a Danish retailer, 3 February 2023, paragraph 23.

Questionnaire to competitors, question H.M.9.

Questionnaire to customers, question I.3; Questionnaire to competitors, question I.3.

Questionnaire to customers, question I.4; Questionnaire to competitors, question I.4.

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this specific market. In particular, the Commission has examined the following factors:

(g) Ambrosi itself does not manufacture its own ricotta and relies on a third-party (Geia) in Denmark for distribution. This shows that it is possible to enter and expand in the supply of branded ricotta in Denmark without having specific distribution capabilities in Denmark and without having specific production capabilities for ricotta.

(369) Fourth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Denmark. In addition, none of the customers and competitors that expressed a negative opinion on the concentration specifically mentioned the effects on the supply of ricotta in Denmark.

(370) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded ricotta to the modern retail channel in Denmark.

6.3.5. Estonia

(371) Based on the market share data submitted by the Parties, the concentration gives rise to a horizontally affected market in Estonia with respect to branded cow mozzarella in the modern retail channel.

(372) Both Lactalis and Ambrosi supply branded cow mozzarella in the modern retail channel in Estonia. Lactalis supplies branded cow mozzarella in Estonia via the

Minutes of a call with a Danish retailer, 3 February 2023, paragraph 23.

Questionnaire to competitors, question H.M.9.

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(379) Fourth, the barriers to entry and expansion in the market for the supply of branded cow mozzarella in Estonia appear to be low.

(a) With only 89 tonnes of branded cow mozzarella sold in Estonia to modern retailers in 2021, the size of the market is small. Thus, also suppliers of cow mozzarella with lower output volumes could satisfy the need for cow mozzarella in Estonia.

(b) Six large manufacturers of branded cow mozzarella, including Granarolo and Zanetti, stated that, in case of an increase of demand for cow mozzarella, they have the capacity to increase exports or start exporting cow mozzarella to the whole of the EEA, including Estonia.

(380) Fifth, the Parties will continue to face (potentially out-of-market) constraints from private label suppliers of cow mozzarella in Estonia which makes up the majority of the demand for cow mozzarella in the modern retail channel in Estonia in 2021 (148 tonnes of private label cow mozzarella sold compared to only 89 tonnes of branded cow mozzarella sold). The Parties do not supply private label cow mozzarella to modern retailers in Estonia and therefore all of the current supply for private label cow mozzarella in Estonia is provided by competitors. Whilst private label products may not be in the same market as branded products, it is still likely that they competitively constrain the Parties as an out-of-market constraint.

(381) Sixth, while some customers expressed a negative view on the impact of the concentration on the supply of Italian cheeses in Estonia, the majority of competitors having expressed an opinion held that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheeses in Estonia. In addition, none of the customers and competitors that expressed a negative opinion on the concentration specifically mentioned the effects on the supply of cow mozzarella in Estonia.

(382) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded cow mozzarella to the modern retail channel in Estonia.

6.3.6. Finland

(383) Based on the market share data submitted by the Parties, the concentration gives rise to horizontally affected markets in relation to the following cheese types in Finland: Pecorino Romano and ricotta.

However, it should be noted that the small size of the Estonian market for cow mozzarella may also negatively affect the incentives to enter this market by manufacturers and other suppliers currently not yet active in Estonia.

Questionnaire to competitors, question H.M.9.

Questionnaire to customers, question I.3, and questionnaire to competitors, question I.3.

Questionnaire to customers, question I.4; Questionnaire to competitors, question I.4.

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(390) Fourth, barriers to entry and expansion seem moderate in Finland for PDO Pecorino Romano. While market participants mostly consider entry difficult or very difficult, the size of the market is small and demand in Finland could be justified by suppliers of PDO Pecorino Romano with lower output volumes. Namely, only 47.1 tonnes of PDO Pecorino Romano were sold in Finland overall in 2021, according to the Parties’ estimate, and Lactalis’ sales volume in Finland is also negligible for PDO Pecorino Romano, i.e. just [volume] in 2021. Moreover, from a logistical point of view, switching suppliers of PDO Pecorino Romano appears to be relatively easy for Finish customers since, due to the PDO requirements, these products are all produced in a reduced area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(391) Fifth, a number of strong competitors of the Parties are active in the supply of PDO Pecorino Romano in neighbouring markets (Norway, Sweden and Denmark) and could enter the Finnish market. A majority of competitors submit that there are no or not particularly significant differences between consumer preferences and conditions of competition for the supply of Italian cheeses across Denmark, Sweden, Norway and Finland. Apart from Zanetti and Granarolo, Tine is also active in the sale of PDO Pecorino Romano in Denmark, Sweden and Norway and, therefore, should be able to easily and promptly enter the Finish market. Tine, as well as Zanetti and Granarolo, have expressed that entering the Finnish market would entail medium difficulty.

(392) Sixth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral or positive impact on the level of competition in the wholesale distribution of Italian cheese in Finland.

(393) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market on the market for the supply of PDO Pecorino Romano to the modern retail channel in Finland.

6.3.6.2. Ricotta

(394) Both Lactalis and Ambrosi supply branded ricotta in the modern retail channel in Finland.

(395) As shown in Table 21, the combined market share of the Parties is equal to [20-30]% whereas the increment from Lactalis is equal to [0-5]%. The Notifying Party has not attributed the remaining [70-80]% of market share to any specific other competitors.

Questionnaire to customers, question H.D.D.1, questionnaire to competitors, question H.D.D.1.

Questionnaire to competitors, question F.5.

Questionnaire to competitors, questions C.A.3-6.

Questionnaire to competitors, questions H.D.D.1.

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(407) The Commission finds the following:

(408) First, Lactalis had minimal sales of PDO Parmigiano Reggiano in France in 2021 ([volume]). The concentration will bring a limited increment of [0-5]% to Ambrosi’s moderate market share of [30-40]%. The concentration would result in an HHI delta that is substantially less than 150 (about [0-50]). This is significantly below the indicative threshold under which concentrations are generally presumed not to be liable of impeding effective competition.

(409) Second, after the concentration, the combined entity will continue to face significant competitive pressure from other competitors. French customers have confirmed that Entremont, Savencia, Granarolo, Galileo, Colla, Trentin and Vivaldi are important suppliers of PDO Parmigiano Reggiano in France. Granarolo seems to be particularly prominent in France, since it estimates its market share to be around [20-30]% in the supply of PDO Parmigiano Reggiano and PDO Grana Padano in France.

(410) Third, significant Italian suppliers of PDO Parmigiano Reggiano, namely Zanetti, Treo, Ferrari Giovanni, Soster Formaggi, Produttori Latte Associati Cremona and Per Inter have also submitted that they sell PDO Parmigiano Reggiano in France. Zanetti, in particular, has its own distribution network in France through which it serves the French market.

(411) Fourth, Parmigiano Reggiano suppliers will have spare and increasing capacity to export their production. Namely, eight competitors of the Parties have indicated that they would have the spare capacity and willingness to increase their exports or start exporting their PDO Parmigiano Reggiano across the EEA, including France, should there be an increase in demand. This includes significant PDO Parmigiano Reggiano suppliers not yet present in France, such as Saviola or Boni. They would all be able to export PDO Parmigiano Reggiano to the whole EEA. Significant PDO Parmigiano Reggiano suppliers already present in France, like Zanetti or Granarolo, would also have spare capacity to increase exports to the EEA, including France.

(412) Fifth, barriers to entry and expansion do not seem particularly high in France:

(a) The views of market participants on how easy or difficult entry into the French market is are not uniform. While a majority of respondents consider it difficult or very difficult, there are already numerous Italian PDO Parmigiano Reggiano suppliers active in France.

(b) Large French modern trade retailers have their own distribution networks and warehouses close to the Italian border that can be used by PDO Parmigiano Reggiano suppliers (all located in the Northern regions of Italy) to distribute their products in France.

Horizontal Merger Guidelines, paragraph 20.

Questionnaire to customers, question H.E.C.5.

Minutes of the call with a competitor on 13 January 2023, para.15.

Questionnaire to competitors, question C.A.3-6.

Questionnaire to competitors, question H.M.9.

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(415) Eighth, the views of customers and competitors having expressed an opinion on the impact of the concentration on competition in the wholesale distribution of Italian cheese in France is not uniform. While a majority considers that the concentration will have a negative impact, none of the customers and competitors who responded that the impact on the French Italian cheese market would be negative have expressed concerns specifically with regard to the supply of PDO Parmigiano Reggiano in France. Moreover, negative effects are foreseen mostly by large modern retail customers in France, while it appears that: (i) the concentration will not give rise to affected markets in the sale of PDO Parmigiano Reggiano in the modern trade channel in France; and (ii) large French retailers have a strong buyer power and have delisted Lactalis’ products several times in the past. Moreover, although market participants seem to be concerned about the absence of alternative suppliers of PDO Parmigiano Reggiano in France, as seen above in paragraphs (409) and (410) the market investigation shows that the French market for PDO Parmigiano Reggiano is very fragmented and numerous alternatives exist.

Minutes of the calls with a customer on 29 November 2022, para. 16, and with Intermarché on 28 November 2022, para. 12.

Questionnaire to competitors, question D.D.5-1.

Questionnaire to customers, question I.3; Questionnaire to competitors, question I.3.

Questionnaire to customers, question I.4; Questionnaire to competitors, question I.4.

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(423) Fourth, three competitors of the Parties have indicated that they would have the spare capacity and willingness to increase their exports or start exporting their PDO Pecorino Romano across the EEA, including France, should there be an increase in demand. This includes significant PDO Pecorino Romano suppliers not yet present in France, such as Saviola or Ferrari Giovanni, who would all be able to export PDO Pecorino Romano to the whole EEA. Significant PDO Pecorino Romano suppliers already present in France, namely Granarolo, would also have spare capacity to increase exports to France.

(424) Fifth, barriers to entry and expansion do not seem particularly high in France:

(a) The views of market participants on how easy or difficult entry into the French market is are not uniform. While a majority of respondents consider it difficult or very difficult, as seen in paragraphs (421) and (422) there are already numerous Italian PDO Pecorino Romano suppliers active in France.

(b) Large French modern trade retailers have their own distribution networks and warehouses close to the Italian border that can be used by PDO Pecorino Romano suppliers to distribute their products in France.

(425) Sixth, from a logistical point of view, switching suppliers of PDO Pecorino Romano appears to be relatively easy for French customers since, due to the PDO requirements, these products are all produced in a reduced area in Italy. Therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(426) Seventh, the views of customers and competitors having expressed an opinion on the impact of the concentration on competition in the wholesale distribution of Italian cheese in France is not uniform. While a majority, mostly large modern trade customers in France, considers that the concentration will have a negative impact as regards the supply of Italian cheese in France, it appears that: (i) the concentration will not give rise to affected markets in the sale of PDO Pecorino Romano in the modern trade channel in France; and (ii) large French retailers have a strong buyer power and have delisted Lactalis’ products several times in the past. Moreover, customers and competitors have not expressed specific concerns with regard to the supply PDO Pecorino Romano in France post-concentration. This might be due to the fragmented nature of the PDO Pecorino Romano market in France, as explained in paragraph (421).

(427) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question H.M.9.

Questionnaire to customers, question H.E.D.1, questionnaire to competitors, question H.E.D.1.

Minutes of the calls with a customer on 29 November 2022, para. 16, and with a customer on 28 November 2022, para. 12.

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have also identified number of additional suppliers of other Italian-type hard cheese in France, namely: Granarolo, Zanetti, Colla, Pert Inter, Treo, Vivaldi, Caliléo.

(434) Fourth, Treo, Soster Formaggi, Granarolo, Per Inter and Zanetti confirmed that they sell other Italian-type hard cheese in France.

(435) Fifth, barriers to entry and expansion do not seem particularly high in France also for other Italian-type hard cheese:

(a) The views of market participants on how easy or difficult entry into the French market is are not uniform. While a majority of respondents consider it difficult or very difficult, there are already numerous suppliers of other Italian-type hard cheese active in France.

(b) Large French modern trade retailers have their own distribution networks and warehouses close to the Italian border that can be used by Italian suppliers of other Italian-type hard cheeses to distribute their products in France.

(c) Lactalis’ sales volume in France, which amounts to [volume] in 2021 for other Italian-type hard cheeses, is also limited. Thus, also suppliers of other Italian-type hard cheeses with lower output volumes could satisfy the need for this product in France.

(436) Sixth, significant suppliers active in the sale of other Italian-type hard cheeses in France, namely Zanetti, have indicated that it would be possible and easy for a supplier already selling cheeses to supermarkets to start selling to traditional retailers. Hence, post-merger, the Parties would also face competition in the traditional channel in France from competitors supplying the modern retail channel.

(437) Seventh, five competitors of the Parties have indicated that, in case of an increase of the demand for other Italian-type hard cheeses, they have the capacity to increase exports or start exporting other Italian-type hard cheeses to new EEA countries, including France. This includes significant suppliers of other Italian-type hard cheeses not yet present in France, such as Saviola, Biraghi or BMI. Each of them would be able to export other Italian-type hard cheeses to the whole EEA. Zanetti and Granarolo, significant suppliers of other Italian-type hard cheeses in France, would also have spare capacity to increase exports to France.

(438) Eighth, the views of customers and competitors having expressed an opinion on the impact of the concentration on competition in the wholesale distribution of Italian cheese in France is not uniform. While a majority, mostly large modern trade customers in France, considers that the concentration will have a negative impact as regards the supply of Italian cheese in France, it appears that: (i) the

Questionnaire to customers, question H.E.C.7, questionnaire to competitors, question H.E.C.7.

Questionnaire to competitors, question C.A.3-6.

Questionnaire to customers, question H.E.D.1, questionnaire to competitors, question H.E.D.1.

Minutes of the calls with a customer on 29 November 2022, para. 16, and with a customer on 28 November 2022, para. 12.

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(a) Large French modern trade retailers have their own distribution networks and warehouses close to the Italian border that can be used by cow mozzarella suppliers to distribute their products in France.

(b) The views of customers and competitors regarding how easy or difficult it is to enter the French market are not uniform. First, whilst some competitors find it “difficult” or “very difficult”, approximately the same number of competitors find it “very easy”, “easy” or “medium”. Second, whereas some of the customers having expressed an opinion state that it is “difficult”, approximately the same number state that it is “medium”.

(449) Sixth, whilst a majority of the customers having expressed an opinion were of the view that the concentration’s impact on the level of competition in the wholesale distribution of Italian cheese in France would be negative, a significant minority held that it would be neutral or positive. Many of the customers believing the impact would be negative are large French retailers, which appear to have a strong buyer power (as evidenced, for instance, by their ability to delist Lactalis’ products several times in the past). Moreover, whilst some of the responding competitors held that the concentration would have a negative impact on the level of competition in the wholesale distribution of Italian cheese in France, almost the same number of competitors found that this impact would be neutral or positive. None of the customers and competitors that were of the view that the concentration’s impact on the level of competition in France was negative, expressed any specific concerns in relation to the supply of branded cow mozzarella to modern retailers. One competitor in France stated that “the transaction does not raise any concerns and may be even positive for the Italian cheese industry”. In addition, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies.

(450) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded cow mozzarella to the modern retail channel in France.

Minutes of the calls with a customer on 29 November 2022, para. 16, and with Intermarché on 28 November 2022, para. 12.

Questionnaire to competitors, question H.E.D.1.

Questionnaire to competitors, question H.E.D.1.

Questionnaire to customers, question I.3.

Minutes of the call with a competitor on 17 January 2023, para.15.

Form CO, paragraphs 1322-1328.

Questionnaire to competitors, question I.3.

Questionnaire to customers, question I.4; Questionnaire to competitors, question I.4.

91

(529) an Italian manufacturer) and Treo (a French supplier of third-party cheeses). Other competitors active in the supply of cow mozzarella focussing on the OOH channel include Eurial, Arla Foods, Metro Chef and other Belgian, Dutch and German suppliers of shredded mozzarella, which purchase blocks of dry mozzarella, shred it and sell it in the French Ho.Re.Ca and industrial channels.

(456) Third, upstream the Parties only produce a relatively limited amount of the total volume of cow mozzarella sold in the EEA and elsewhere. In particular, Lactalis’ production share for Italian produced cow mozzarella was equal to only around [20-30]% in 2022, whereas Ambrosi does not produce cow mozzarella at all and instead only resells cow mozzarella produced by third-parties. Therefore, the concentration will not result in a bottleneck at the production level and retail customers in France will continue to be able to import cow mozzarella from a range of manufacturers independent from the Parties. In this regard, six large manufacturers of cow mozzarella, including Granarolo and Zanetti, stated that, in case of an increase of demand for cow mozzarella, they have the capacity to increase exports to the whole of the EEA, including France.

(457) Fourth, there is potential for alternative suppliers to come into the market for the supply of cow mozzarella to the OOH channel in France.

(a) One competitor of the Parties in the supply of cow mozzarella to the OOH channel in France noted that they do not have their own distribution network but rely instead on a third-party distributor that handles both fresh and frozen products. According to this competitor of the Parties, “having a distribution network does not constitute a competitive advantage in the cheese market“. It should therefore be relatively easily possible for Italian producers of cow mozzarella to start supplying the French OOH market segment without having to build up their own distribution network in France.

(b) However, the views of customers and competitors regarding how easy or difficult it is to enter the French market are not uniform. First, whilst a majority of competitors find it “difficult” or “very difficult”, almost the same number of competitors find it “very easy”, “easy” or “medium”. Second, whereas some of all customers having expressed an opinion state that it is “difficult”, approximately the same number state that it is “medium”.

(458) Fifth, whilst a majority of the customers having expressed an opinion were of the view that the concentration’s impact on the level of competition in the wholesale distribution of Italian cheese in France would be negative, a significant minority held that it would be neutral or positive. Many of the customers believing the impact would be negative are large French retailers, which appear to have strong buyer power and which have delisted Lactalis’ products several times in the past. Moreover, whilst some of the responding competitors held that the concentration would have a negative impact on the level of competition in the wholesale distribution of Italian cheese in France, almost the same number of competitors found that this impact would be neutral or positive. None of the customers and competitors that were of the view that the concentration’s impact on the level of competition in France was negative, expressed any specific concerns in relation to buffalo mozzarella. One competitor in France stated that “the transaction does not raise any concerns and may be even positive for the Italian cheese industry”. In addition, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies.

(459) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded buffalo mozzarella to the modern retail channel in France.

(460) Both Lactalis and Ambrosi supply branded and private label buffalo mozzarella in the modern retail channel in France. Lactalis supplies branded buffalo mozzarella in France via the Galbani, Castelli and Mandara brands, whereas Ambrosi supplies buffalo mozzarella manufactured by third-parties under the Ambrosi brand.

(461) As shown in Table 27, the combined market share of the Parties in the supply of branded buffalo mozzarella to the modern retail channel in France is equal to [20-30]% whereas the increment from Ambrosi is equal to [0-5]%. The Notifying Party has attributed [30-40]% of the remaining market share to Granarolo and [30-40]% to other unnamed competitors.

Form CO, paragraphs 1322-1328.

94

(467) Fourth, there is potential for new suppliers to come into the market for the supply of branded buffalo mozzarella in France.

(a) Large French modern trade retailers have their own distribution networks and warehouses close to the Italian border that can be used by buffalo mozzarella suppliers to distribute their products in France.

(b) The views of customers and competitors regarding how easy or difficult it is to enter the French market are not uniform. First, whilst a majority of competitors find it “difficult” or “very difficult”, almost the same number of competitors find it “very easy”, “easy” or “medium”. Second, whereas some of all customers having expressed an opinion state that it is “difficult”, approximately the same number state that it is “medium”.

(468) Fifth, whilst a majority of the customers having expressed an opinion were of the view that the concentration’s impact on the level of competition in the wholesale distribution of Italian cheese in France would be negative, a significant minority held that it would be neutral or positive. Many of the customers believing the impact would be negative are large French retailers, which appear to have strong buyer power and which have delisted Lactalis’ products several times in the past. Moreover, whilst some of the responding competitors held that the concentration would have a negative impact on the level of competition in the wholesale distribution of Italian cheese in France, almost the same number of competitors found that this impact would be neutral or positive. None of the customers and competitors that were of the view that the concentration’s impact on the level of competition in France was negative, expressed any specific concerns in relation to buffalo mozzarella. One competitor in France stated that “the transaction does not raise any concerns and may be even positive for the Italian cheese industry”. In addition, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies.

(469) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded buffalo mozzarella to the modern retail channel in France.

Questionnaire to competitors, question H.M.9.

Minutes of the calls with a customer on 29 November 2022, para. 16, and with Intermarché on 28 November 2022, para. 12.

Questionnaire to competitors, question H.E.D.1.

Questionnaire to customers, question I.3.

Minutes of the call with a competitor on 17 January 2023, para.15.

Form CO, paragraphs 1322-1328.

Questionnaire to competitors, question I.3.

Questionnaire to customers, question I.4; Questionnaire to competitors, question I.4.

96

Lactalis’ production share for Italian produced buffalo mozzarella was equal to only around [5-10]% in 2022, whereas Ambrosi does not produce buffalo mozzarella at all and instead only resells buffalo mozzarella produced by third-parties. Therefore, the concentration will not result in a bottleneck at the production level and retail customers in France will continue to be able to import buffalo mozzarella from a range of manufacturers independent from the Parties. In this regard, several large manufacturers of buffalo mozzarella have indicated that, in case of an increase of the demand for buffalo mozzarella, they have the capacity to increase exports or start exporting buffalo mozzarella to new EEA countries, including to France.

(477) Fifth, there is potential for new suppliers of gorgonzola to come into the market.

(a) Large French modern trade retailers have their own distribution networks and warehouses close to the Italian border that can be used by buffalo mozzarella suppliers to distribute their products in France.

(b) The views of customers and competitors regarding how easy or difficult it is to enter the French market are not uniform. First, almost the same number of competitors find it “difficult” or “very difficult”, as those that find it “very easy”, “easy” or “medium”. Second, whereas almost half of all customers having expressed an opinion state that it is “difficult”, approximately the same number state that it is “medium”.

(478) Sixth, whilst a majority of the customers having expressed an opinion were of the view that the concentration’s impact on the level of competition in the wholesale distribution of Italian cheese in France would be negative, a significant minority held that it would be neutral or positive. Many of the customers believing the impact would be negative are large French retailers, which appear to have a strong buyer power and which have delisted Lactalis’ products several times in the past. Moreover, whilst some of the responding competitors held that the concentration would have a negative impact on the level of competition in the wholesale distribution of Italian cheese in France, almost the same number of competitors found that this impact would be neutral or positive. None of the customers and competitors that were of the view that the concentration’s impact on the level of competition in France was negative, expressed any specific concerns in relation to the supply of private label buffalo mozzarella. One competitor in France stated that “the transaction does not raise any concerns and may be even positive for the Italian cheese industry”. In addition, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies.

(479) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded buffalo mozzarella to the modern retail channel in France.

(460) Both Lactalis and Ambrosi supply branded and private label buffalo mozzarella in the modern retail channel in France. Lactalis supplies branded buffalo mozzarella in France via the Galbani, Castelli and Mandara brands, whereas Ambrosi supplies buffalo mozzarella manufactured by third-parties under the Ambrosi brand.

(461) As shown in Table 27, the combined market share of the Parties in the supply of branded buffalo mozzarella to the modern retail channel in France is equal to [20-30]% whereas the increment from Ambrosi is equal to [0-5]%. The Notifying Party has attributed [30-40]% of the remaining market share to Granarolo and [30-40]% to other unnamed competitors.

Form CO, paragraphs 1322-1328.

94

(467) Fourth, there is potential for new suppliers to come into the market for the supply of branded buffalo mozzarella in France.

(a) Large French modern trade retailers have their own distribution networks and warehouses close to the Italian border that can be used by buffalo mozzarella suppliers to distribute their products in France.

(b) The views of customers and competitors regarding how easy or difficult it is to enter the French market are not uniform. First, whilst a majority of competitors find it “difficult” or “very difficult”, almost the same number of competitors find it “very easy”, “easy” or “medium”. Second, whereas some of all customers having expressed an opinion state that it is “difficult”, approximately the same number state that it is “medium”.

(468) Fifth, whilst a majority of the customers having expressed an opinion were of the view that the concentration’s impact on the level of competition in the wholesale distribution of Italian cheese in France would be negative, a significant minority held that it would be neutral or positive. Many of the customers believing the impact would be negative are large French retailers, which appear to have strong buyer power and which have delisted Lactalis’ products several times in the past. Moreover, whilst some of the responding competitors held that the concentration would have a negative impact on the level of competition in the wholesale distribution of Italian cheese in France, almost the same number of competitors found that this impact would be neutral or positive. None of the customers and competitors that were of the view that the concentration’s impact on the level of competition in France was negative, expressed any specific concerns in relation to buffalo mozzarella. One competitor in France stated that “the transaction does not raise any concerns and may be even positive for the Italian cheese industry”. In addition, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies.

(469) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded buffalo mozzarella to the modern retail channel in France.

Questionnaire to competitors, question H.M.9.

Minutes of the calls with a customer on 29 November 2022, para. 16, and with Intermarché on 28 November 2022, para. 12.

Questionnaire to competitors, question H.E.D.1.

Questionnaire to customers, question I.3.

Minutes of the call with a competitor on 17 January 2023, para.15.

Form CO, paragraphs 1322-1328.

Questionnaire to competitors, question I.3.

Questionnaire to customers, question I.4; Questionnaire to competitors, question I.4.

96

Parties’ response to RFI 9.

Questionnaire to competitors, question H.M.9.

Minutes from a call with a French supplier of cow mozzarella, 17 January 2023, paragraph 12.

Questionnaire to competitors, question H.E.D.1.

Questionnaire to competitors, question H.E.D.1.

Questionnaire to customers, question I.3.

Questionnaire to competitors, question I.3.

Questionnaire to customers, question I.4; Questionnaire to competitors, question I.4.

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(516) The Commission finds the following:

(517) First, while the combined market share of the Parties is high, the increment added by Ambrosi’s market share through the concentration would be small at only [0-5]% (with only [volume] of branded feta supplied by Ambrosi in 2021). The concentration would result in an HHI delta of less than 150 (about [50-150]). This is below the indicative threshold under which concentrations are generally presumed not to be liable of impeding effective competition.

(518) Second, the Parties will continue to face competition from other existing suppliers of branded feta in France, including particularly from Bel, as well as from Granarolo, Per Inter and Savencia, who all confirmed during the market investigation that they already supply feta in France.

(519) Third, the Parties will continue to face (potential out-of-market) constraints from private label suppliers of feta in France which made up over half of the total demand for feta in the modern retail channel in France in 2021. Ambrosi is not active at all in the supply of private label feta in France, whereas Lactalis’ estimated share is only [20-30]% in this segment. During the Lactalis/Nuova Castelli investigation, Arla Foods, LA Farm, Tyras and Hochland were identified as the most important competitors in the supply of private label feta in France. Whilst private label products may not be in the same market as branded products, it is still likely that they competitively constrain the Parties as an out-of-market constraint.

(520) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded feta to the modern retail channel in France.

6.3.7.9. Gorgonzola

(521) Based on the Parties’ market share estimates, their combined market shares in volume for the supply of PDO gorgonzola in France in 2021 are: (i) [40-50]% for branded PDO gorgonzola the modern retail channel ([30-40]% Lactalis and [10-20]% Ambrosi); (ii) [30-40]% for private label PDO gorgonzola the modern retail channel ([30-40]% Lactalis and [0-5]% Ambrosi); (iii) [30-40]% for branded PDO gorgonzola the traditional retail channel ([0-5]% Lactalis and [30-40]% Ambrosi); and (iv) [20-30]% for the OOH channel ([0-5]% Lactalis and [20-30]% Ambrosi). The Notifying Party has not attributed the remaining market shares in each segment to any specific other competitors.

(522) The Notifying Party argues that the concentration does not raise any competitive concerns for the following reasons: (i) in all sales channels, the Parties’ combined market share is moderate, and in the traditional retail channel the increment is trivial; (ii) the Parties are not close competitors (Lactalis produces gorgonzola, whilst Ambrosi does not); (iii) there is competitive pressure from suppliers of other similar Italian cheese; (iv) there are no significant barriers to

Horizontal Merger Guidelines, paragraph 20.

M.9413 Lactalis/Nuova Castelli, paragraph 415.

Questionnaire to competitors, question C.A.3.

M.9413 Lactalis/Nuova Castelli, paragraph 415.

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(560) First, there is potential for new suppliers of taleggio to come into the market in France.

(a) With 27.9 tonnes of taleggio sold overall to the modern retail channel in France in 2021, and 116 tonnes sold overall to the OOH channel, the sizes of the markets are relatively small. Thus, also suppliers of taleggio with lower output volumes could satisfy the need for taleggio in France. This also means that the Parties’ market positioning is not entrenched, as limited sales would allow competitors to capture large portions of the market and since the switch of an important customer could reshuffle market shares.

(b) However, the views of customers and competitors regarding how easy or difficult it is for a supplier of Italian cheese, such as gorgonzola, to enter the French market are not entirely uniform. Whilst some of the responding competitors held that entry would be difficult or very difficult, approximately the same number of competitors held that this would be very easy, easy or medium. Moreover, whilst a some of the customers having expressed an opinion indicated that entry would be difficult or very difficult, approximately the same number of customers indicated that it would be “medium”. The results of the market investigation are thus inconclusive in this regard.

(c) Nevertheless, several competitors of the Parties have indicated that, in case of an increase of the demand for taleggio, they have the capacity to increase exports or start exporting taleggio to the whole EEA. This includes a competitor who is already supplying taleggio in France.

(561) Second, from a logistical point of view, switching suppliers of PDO taleggio appears to be relatively easy since, due to the PDO requirements, these products are all produced in a certain area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(562) Third, whilst a majority of the customers having expressed an opinion were of the view that the concentration’s impact on the level of competition in the wholesale distribution of Italian cheese in France would be negative, a significant minority held that it would be neutral or positive. Furthermore, many of the customers believing the impact would be negative are large French retailers, which appear to have a strong buyer power (as evidenced, for instance, by their ability to delist several products supplied by Lactalis in the past). None of the customers who responded that the impact would be negative expressed concerns specifically with regard to the supply of mozzarella. Moreover, whilst some of the responding competitors held that the concentration would have a negative impact on the level of competition in the wholesale distribution of Italian cheese in France, almost the same number of competitors found that this impact would be neutral or positive.

Questionnaire to competitors, question H.E.D.1.

Questionnaire to competitors, question H.E.D.1.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question C.A.3.

Questionnaire to customers, question I.3.

Minutes of the call with a competitor on 17 January 2023, para.15.

Form CO, paragraphs 1322-1328.

Questionnaire to customers, question I.4.

(568) Second, the Parties will continue to face competition from other suppliers of magor in France. In particular, Igor, Vivaldi, Alliance Eurofood, Granarolo, Ciresa, Per Inter, Galileo, CLM Diffusion, Defendi and Bassi have been identified as important suppliers of magor to retailers in France.

(569) Third, several competitors of the Parties have indicated that, in case of an increase of the demand for magor, they have the capacity to increase exports or start exporting magor to the whole EEA. This includes a competitor who is already supplying magor in France.

(570) Fourth, whilst a majority of the customers having expressed an opinion were of the view that the concentration’s impact on the level of competition in the wholesale distribution of Italian cheese in France would be negative, a significant minority held that it would be neutral or positive. Many of the customers believing the impact would be negative are large French retailers, which appear to have a strong buyer power (as evidenced, for instance, by their ability to delist several products supplied by Lactalis in the past). None of the customers who responded that the impact would be negative have expressed concerns specifically with regard to the supply of branded magor to the retail channel in France. Moreover, whilst some of the responding competitors held that the concentration would have a negative impact on the level of competition in the wholesale distribution of Italian cheese in France, almost the same number of competitors found that this impact would be neutral or positive. However, none of the competitors who responded that the impact would be negative have expressed concerns specifically with regard to the supply of branded magor to the retail channel in France. Furthermore, none of the competitors believing that the impact in France would be negative are supplying magor in France. The one competitor who expressed a view that is supplying magor in France held that the impact would be positive. In addition, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies.

(571) In conclusion, in light of the above, the Commission finds that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded magor to the modern retail channel in France.

6.3.7.13. Paste filate

(572) The Parties combined market share in the supply of paste filate to the OOH channel in France is [30-40]%, with an increment of [0-5]%. The Notifying Party has not

Questionnaire to customers, question H.E.C.1; Questionnaire to competitors, question H.E.C.1.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question C.A.3.

Questionnaire to customers, question I.3.

Minutes of the call with a competitor on 17 January 2023, paragraph 15.

Form CO, paragraphs 1322-1328.

Questionnaire to customers, question I.4.

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(579) Fifth, significant suppliers active in the sale of paste filate in France, namely Zanetti and Granarolo, have indicated that it would be possible and easy for a supplier already selling cheeses to supermarkets to start selling to the Ho.Re.Ca channel. Hence, post-merger, it appears as if the Parties, when supplying paste filate to Ho.Re.Ca customers, would also face competitive constraint from companies supplying paste filate to the modern retail channel.

(580) In conclusion, in light of the above, the Commission finds that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of paste filate to the OOH channel in France.

6.3.8. Germany

(581) Based on the market share data submitted by the Parties, the concentration gives rise to horizontally affected markets in relation to the cheese type ricotta in Germany.

6.3.8.1. Ricotta

(582) Both Lactalis and Ambrosi supply ricotta in the modern retail channel and in the OOH channel in Germany.

Questionnaire to customers, question I.3.

Minutes of the call with a competitor on 17 January 2023, para.15.

Form CO, paragraphs 1322-1328.

Questionnaire to customers, question I.4.

119

(589) Second, the Parties will continue to face competition from other existing suppliers of branded ricotta in Germany, including from Cepparo, Granarolo and Zanetti, who confirmed that they supply ricotta in Germany. In addition, the Parties will be constrained by Trentin and Goldsteig, who also supply branded ricotta to modern retailers in Germany.

(590) Third, the Parties will face additional (potentially out-of-market) constraints from private label suppliers of ricotta in Germany, a segment in which neither Party is active in, as well as from suppliers of branded and private label ricotta to the traditional retail channel, again a sub-segment in which currently neither Party is active in, but which makes up almost half of the total demand for branded ricotta in 2021 according to the Parties’ estimates. Whilst private label products may not be in the same market as branded products, it is still likely that they competitively constrain the Parties as an out-of-market constraint.

(591) Fourth, five Italian manufacturers of ricotta and one Nordic third-party supplier stated that, in case of an increase of demand for ricotta, they would have the capacity to increase exports or start exporting ricotta to the whole of the EEA, including Germany.

(592) Fifth, most competitors and customers in Germany did not voice any concerns regarding the concentration. In particular, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies. Moreover, a majority of customers having expressed an opinion indicated that the concentration would have a neutral or positive impact on the level of competition in the wholesale distribution of Italian cheese in Germany, whilst an equal number of responding competitors found that the impact would be neutral or positive rather than negative.

(593) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded ricotta to the modern retail channel in Germany.

6.3.8.1.2. OOH channel

(594) As shown in Table 43, the combined market share of the Parties in the supply of ricotta to the OOH channel in Germany is equal to [20-30]% whereas the increment from Ambrosi is less than [0-5]%. The Notifying Party has not attributed the remaining [80-90]% of market share to any specific other competitors.

Horizontal Merger Guidelines, paragraph 20.

Questionnaire to competitors, question C.A.3.

M.9413 Lactalis / Nuova Castelli, paragraphs 591-592.

Questionnaire to competitors, question H.M.9.

Questionnaire to customers, question I.3.

Questionnaire to competitors, questions I.1; Questionnaire to customers, question I.1.

121

(608) Second, after the concentration, the combined entity will continue to face significant competitive pressure from other competitors. Greek customers have confirmed that Granarolo, Latteria Soresina and Boni are important suppliers of PDO Grana Padano in Greece.

(609) Third, in addition to the competitors cited by the Parties and by respondents in the market investigation, other significant Italian suppliers of PDO Grana Padano, namely Zanetti and Produttori Latte Associati Cremona have also submitted that they sell PDO Grana Padano in Greece.

(610) Fourth, barriers to entry and expansion seem moderate in Greece for PDO Grana Padano, based on the results of the market investigation. Seven competitors and customers consider entry easy or very easy, while three other competitors and customers consider it difficult or very difficult. Seven other customers and competitors consider difficulty of entry to be medium. In addition, with only 143 tonnes of PDO Grana Padano sold to the OOH channel in Greece in 2021, the size of the market is small. Thus, also suppliers of PDO Grana Padano with lower output volumes could satisfy the need for PDO Grana Padano in Greece.

(611) Fifth, from a logistical point of view, switching suppliers of PDO Grana Padano appears to be relatively easy for Greek customers since, due to the PDO requirements, these products are all produced in a limited area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(612) Sixth, three significant competitors of the Parties have indicated that, in case of an increase of the demand for PDO Grana Padano, they have the capacity to increase exports or start exporting PDO Grana Padano to new EEA countries including Greece, namely Saviola, who is not yet present in Greece, and Cremona and Boni, who already supply PDO Grana Padano in Greece.

(613) Seventh, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Greece.

(614) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market on the market for the supply of PDO Grana Padano in the OOH channel in Greece.

Horizontal Merger Guidelines, paragraph 20.

Questionnaire to customers, question H.E.C.5.

Questionnaire to competitors, question C.A.3-6.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question H.M.9.

Questionnaire to customers, question I.3; Questionnaire to competitors, question I.3.

124

(620) Third, in addition to the competitors cited by the Parties and by respondents in the market investigation, other significant Italian suppliers of PDO Pecorino Romano, namely Zanetti and Granarolo have also submitted that they sell PDO Pecorino Romano in Greece.

(621) Fourth, a significant PDO Pecorino Romano supplier, namely Saviola, who is not yet present in Greece, has indicated that it would have the spare capacity and willingness to start exporting their PDO Pecorino Romano across the EEA, including Greece, should there be an increase in demand.

(622) Fifth, barriers to entry and expansion do not seem particularly high for PDO Pecorino Romano in Greece: seven competitors and customers consider entry easy or very easy, while three other competitors and customers consider it difficult or very difficult. Seven other customers and competitors consider difficulty of entry to be medium. In addition, with only 0.81 tonnes of PDO Pecorino Romano sold to the OOH channel in Greece in 2021, the size of the market is small. Thus, also suppliers of PDO Pecorino Romano with lower output volumes could satisfy the need for PDO Pecorino Romano in Greece.

(623) Sixth, from a logistical point of view, switching suppliers of PDO Pecorino Romano appears to be relatively easy for Greek customers since, due to the PDO requirements, these products are all produced in a limited area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(624) Seventh, two significant suppliers of PDO Pecorino Romano, Ferrari Giovanni and Saviola, who are not yet present in Greece, have indicated that they would have the spare capacity and willingness to start exporting their PDO Pecorino Romano across the EEA, including Greece, should there be an increase in demand.

(625) Eighth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Greece.

(626) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market on the market for the supply of PDO Pecorino Romano in the OOH channel in Greece.

Questionnaire to customers, questions H.E.B.1 and H.E.B.2 and questionnaire to competitors, questions H.E.B.1 and H.E.B.2.

Questionnaire to competitors, question C.A.3-6.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question H.M.9.

Questionnaire to customers, question I.3; Questionnaire to competitors, question I.3.

126

(632) Second, upstream the Parties only produce a relatively limited amount of the total volume of mascarpone sold in the EEA and elsewhere. In particular, Lactalis’ production share for Italian produced mascarpone was equal to only around [10-20]% in 2022, whereas Ambrosi does not produce mascarpone at all and instead only resells mascarpone produced by third-parties. Therefore, the concentration will not result in a bottleneck at the production level and retail customers in Greece will continue to be able to import mascarpone from a range of manufacturers independent from the Parties. In this regard, four large Italian manufacturers of mascarpone stated that, in case of an increase of demand for mascarpone, they have the capacity to increase exports or start exporting mascarpone to the whole of the EEA, including Greece.

(633) Third, the barriers to entry and expansion in the supply of mascarpone to the OOH channel in Greece appear to be low:

(a) With only 45 tonnes of mascarpone sold in Greece to the OOH channel in 2021, the size of the market is very small. Thus, also suppliers of mascarpone with lower output volumes could satisfy the need for mascarpone in the OOH channel in Greece.

(b) The market investigation supports that there are no significant barriers to entry. A large majority of competitors having expressed an opinion found that the level of difficulty for an Italian manufacturer of cheese not yet present in Greece to start exporting its cheese to Greece, when considering all eventual barriers to entry, is “very easy”, “easy” or “medium”. Similarly, a large majority of customers that expressed their opinion held the level of difficulty for customers to begin importing cheese from an Italian manufacturer not yet present in Greece is “easy” or “medium”.

(c) In addition, while the only customer that expressed an opinion on this matter stated that they found it very unlikely that customers would start importing mascarpone from alternative suppliers currently not offered in Greece to offset a lasting and significant increase in the wholesale price for mascarpone in Greece, the two competitors that expressed an opinion stated that they found it very likely that customers would start importing mascarpone from alternative suppliers in this event.

(d) Ambrosi itself does not manufacture its own mascarpone and relies on a third-party distributor in Greece. This shows that it is possible to enter and expand in the supply of mascarpone in Greece without having specific distribution capabilities in Greece and without having specific production capabilities for mascarpone.

Questionnaire to competitors, questions H.F.B.1 and H.F.B.2.

Questionnaire to competitors, question C.A.3.

Parties’ response to RFI 9.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, questions H.M.9.

128

(634) Fourth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Greece.

(635) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of mascarpone to the OOH channel in Greece.

6.3.10. Italy

(636) Based on the market share data submitted by the Parties, the concentration gives rise to horizontally affected markets in relation to the following dairy products in Italy: cow mozzarella, Pecorino Romano, gorgonzola, mascarpone, ricotta, paste filate, butter bulk and butter packet.

6.3.10.1. Cow mozzarella

(637) Both Lactalis and Ambrosi supply branded cow mozzarella in the traditional retail channel in Italy. Lactalis supplies branded cow mozzarella in Italy via the Vallelata, Invernizzi, Latterie Friulane, and Sole brands, whereas Ambrosi supplies it under the Ambrosi brand.

(638) Ambrosi primarily purchases this cow mozzarella from third-party manufacturers in Italy.

(639) As shown in Table 47, the combined market share of the Parties is equal to [40-50]% whereas the increment from Ambrosi is less than [0-5]%. The Notifying Party has attributed [5-10]% of the remaining market share to Granarolo and [40-50]% to other unnamed competitors.

Questionnaire to customers, question I.3.

In Italy, there are plausible markets for the supply of the following cheeses that are also technically affected: bulk cream, cow mozzarella (branded modern retail), Dutch cheese, ricotta and gorgonzola. However, even under the narrowest market definition, the increment from Ambrosi for these cheeses is insignificant (less than [volume] per cheese sold annually with less than [0-5]% market share). As a result, the concentration does not bring a material change to these markets and on this basis the Commission finds that the concentration does not raise serious doubts concerning these market.

Form CO, paragraphs 662-663.

Form CO, paragraph 662.

129

(685) The Commission finds the following:

(686) First, the combined market share of the Parties in this channel is only [20-30]% and thus below the 25% indicative threshold under which concentrations are generally presumed not to be liable of impeding effective competition.

(687) Second, the Parties will continue to face competition from a large range of other suppliers of butter in Italy. In particular, both customers and competitors listed a long list of companies as the current main suppliers of butter in Italy, for example, Latteria Soresina, GranTerre, Arla, Beppino Occelli, Prealpi, Parmareggio, Campo dei fiori, Montanari & Gruzza, DallaTorre, Lurpack, Optimus, Virgilio and others.

(688) Third, none of the customers and competitors that expressed an opinion listed Ambrosi as one of the main suppliers of butter in Italy. In addition, none of the customers that expressed an opinion listed Ambrosi as one of the top three alternatives that they would switch to in case Lactalis’ butter would no longer be available, whereas none of the competitors that expressed an opinion listed Ambrosi as a close competitor to Lactalis.

(689) Fourth, between 2019 and 2021, both Lactalis and Ambrosi have seen significant declines in both their absolute volume of bulk butter sold as well as in the corresponding market shares in the OOH channel in Italy. In particular, according to the Notifying Party, Lactalis’ sales of bulk butter in Italy have decreased from about [volume] in 2019 to about [volume] in 2021 (with a corresponding drop in market share from [20-30]% to [10-20]%), whereas Ambrosi’s sales of bulk butter in Italy have decreased from about [volume] in 2019 to about [volume] in 2021 (with a corresponding drop in market share from [20-30]% to [5-10]%.)

(690) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of bulk butter to the OOH channel in Italy.

6.3.11. Latvia

(691) Based on the market share data submitted by the Parties, the concentration gives rise to horizontally affected markets in relation to the following cheese types in Latvia: cow mozzarella and mascarpone.

6.3.11.1. Cow mozzarella

(692) Both Lactalis and Ambrosi supply branded cow mozzarella in the modern retail channel in Latvia. Lactalis supplies branded cow mozzarella in Latvia via the Galbani and President brands, whereas Ambrosi supplies it under the Ambrosi brand.

(693) As shown in Table 55, the combined market share of the Parties is equal to [40-50]% whereas the increment from Ambrosi is less than [0-5]%. The Notifying Party has been unable to attribute the remaining [50-60]% of market share to any specific competitors.

(694) However, it should be noted that the small size of the Latvian market for cow mozzarella may also negatively affect the incentives to enter this market by manufacturers and other suppliers currently not yet active in Latvia.

(695) (b) Six large manufacturers of cow mozzarella, including branded suppliers Granarolo and Zanetti, stated that, in case of an increase of demand for cow mozzarella, they have the capacity to increase exports or start exporting cow mozzarella to the whole of the EEA, including Latvia.

(696) Fourth, the Parties will continue to face (potentially out-of-market) constraints from private label suppliers of cow mozzarella in Latvia which makes up the majority of the market for cow mozzarella to the modern retail channel in Latvia in 2021 (231 tonnes of private label cow mozzarella sold compared to only 139 tonnes of branded cow mozzarella sold). The Parties do not supply private label cow mozzarella to modern retailers in Estonia and therefore the whole supply of private label cow mozzarella will come from competitors. Whilst private label products may not be in the same market as branded products, it is still likely that they competitively constrain the Parties as an out-of-market constraint.

(697) Fifth, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies. Moreover, while the only two customers that expressed an opinion stated that the concentration would have a negative impact on the level of competition in the wholesale distribution of Italian cheeses in Latvia, the majority of competitors and suppliers that expressed an opinion stated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheeses of in Latvia. In addition, none of the customers and competitors that expressed a negative opinion on the concentration specifically mentioned the effects on the supply of branded cow mozzarella in Latvia.

(698) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded cow mozzarella to the modern retail channel in Latvia.

6.3.11.2. Mascarpone

(699) Both Lactalis and Ambrosi supply branded mascarpone in the modern retail channel in Latvia. Lactalis supplies branded mascarpone in Latvia via the Galbani brand, whereas Ambrosi supplies it under the Ambrosi brand.

(700) As shown in Table 55, the combined market share of the Parties is equal to [40-50]% whereas the increment from Ambrosi is less than [0-5]%. The Notifying Party has been unable to attribute the remaining [50-60]% of market share to any specific competitors.

(701) (b) Four Italian manufacturers of mascarpone stated that, in case of an increase of demand for mascarpone, they have the capacity to increase exports or start exporting mascarpone to the whole of the EEA, including Latvia.

(702) (c) Ambrosi itself does not manufacture its own mascarpone and relies on a third-party distributor in Latvia. This shows that it is possible to enter and expand in the supply of mascarpone in Latvia without having specific distribution capabilities in Latvia and without having specific production capabilities for mascarpone.

(703) Fourth, the Parties will continue to face (potentially out-of-market) constraints from private label suppliers of mascarpone in Latvia which makes up the majority of the market for mascarpone to the modern retail channel in Latvia in 2021 (145 tonnes of private label mascarpone sold compared to only 115 tonnes of branded mascarpone sold). The Parties do not supply private label mascarpone to modern retailers in Latvia and therefore the whole supply of private label mascarpone is provided by competitors of the Parties. Whilst private label products may not be in the same market as branded products, it is still likely that they competitively constrain the Parties as an out-of-market constraint.

(704) Fifth, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies. Moreover, while the only two customers that expressed an opinion stated that the concentration would have a negative impact on the level of competition in the wholesale distribution of Italian cheeses in Latvia, the majority of competitors and suppliers that expressed an opinion stated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheeses of in Latvia. In addition, none of the customers and competitors that expressed a negative opinion on the concentration specifically mentioned the effects on the supply of branded mascarpone in Latvia, whereas one retail customer active in the Baltic region noted that neither Lactalis nor Ambrosi are very strong cheese suppliers in Latvia.

(705) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded mascarpone to the modern retail channel in Latvia.

6.3.12. Norway

(706) Based on the market share data submitted by the Parties, the concentration gives rise to horizontally affected markets in relation to following cheese types in Norway: Parmigiano Reggiano and Grana Padano.

6.3.12.1. Parmigiano Reggiano

(707) Both Lactalis and Ambrosi supply PDO Parmigiano Reggiano in Norway. Based on the Parties’ market share estimates, their combined volume market share in the Italian cheeses across Denmark, Sweden, Norway and Finland. PDO Parmigiano Reggiano competitors active in neighbouring countries include: (i) in Denmark, Granarolo and Zanetti; (ii) in Finland, Ferrari Giovani, Produttori latte associati Cremona, Granarolo and Zanetti; (ii) in Sweden, Granarolo, Zanetti and Tine.

(708) Fourth, PDO Parmigiano Reggiano suppliers will have spare and increasing capacity to export their production, especially to small target markets such as Norway. Eight competitors of the Parties have indicated that they would have the spare capacity and willingness to increase their exports or start exporting their PDO Parmigiano Reggiano across the EEA, including Norway, should there be an increase in demand. This includes significant PDO Parmigiano Reggiano suppliers not yet present in Norway, such as Galli, Ferrari Giovanni, Saviola and Boni. They would all be able to export PDO Parmigiano Reggiano to the whole EEA. Produttori latte associate Cremona specifically cited Norway as a country where it could start exporting PDO Parmigiano Reggiano.

(709) Fifth, from a logistical point of view, switching suppliers of PDO Parmigiano Reggiano appears to be relatively easy for Norwegian customers since, due to the PDO requirements, these products are all produced in a limited area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(710) Sixth, the Parties are not viewed as each other’s closest competitors. Competitors consider Rema 1000 Norge and Parmareggio as both Lactalis and Ambrosi’s closest competitors for PDO Parmigiano Reggiano in Norway. Customers cite Gennaro Aurricchio and Ambrosi as the top alternatives to Lactalis and Gennaro Aurricchio and Lactalis as the top alternatives to Ambrosi.

(711) Seventh, the views of customers and competitors concerning the impact of the concentration on the level of competition in the supply of Italian cheese in Norway are not uniform. While half of them consider it neutral, the other half see it as negative. None of them, however, expressed concerns in relation to the supply of PDO Grana Padano in Norway. In addition, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies.

(712) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market on the market for the supply of PDO Parmigiano Reggiano in the modern retail channel in Norway.

Questionnaire to competitors, question F.5.

Questionnaire to competitors, question C.A.3-6.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question H.M.9-2.

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competitors state that Michelangelo, Gennaro Auricchio, Carl Evensen AS, Colla and Norgesgruppen ASA are important suppliers of PDO Grana Padano in Norway.

(729) Third, a number of strong competitors of the Parties are active in the supply of PDO Grana Padano in neighbouring markets (Sweden, Finland and Denmark) and could easily and promptly enter the Norwegian market. A majority of competitors submit that there are no or not particularly significant differences between consumer preferences and conditions of competition for the supply of Italian cheeses across Denmark, Sweden, Norway and Finland. PDO Grana Padano competitors active in neighbouring countries include: (i) in Denmark, Zanetti, Granarolo, Tine SA and Produttori latte associati Cremona; (ii) in Sweden, Granarolo, Zanetti, Tine and Produttori latte associate Cremona; and (iii) in Norway, Zanetti.

(730) Fourth, six competitors of the Parties have indicated that they would have the spare capacity and willingness to increase their exports or start exporting their PDO Grana Padano across the EEA, including Norway, should there be an increase in demand. This includes significant PDO Grana Padano suppliers not yet present in Norway, such as Ferrari Giovanni, Saviola and Boni. They would all be able to export PDO Grana Padano to the whole EEA, including Norway. Produttori latte associate Cremona specifically cited Norway as a country where it could start exporting PDO Grana Padano.

(731) Fifth, from a logistical point of view, switching suppliers of PDO Grana Padano appears to be relatively easy for Norwegian customers since, due to the PDO requirements, these products are all produced in a limited area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(732) Sixth, the Parties are not viewed as each other’s closest competitors. Competitors consider Colla and Norgesgruppen ASA as Lactalis’ and Ambrosi’s closest competitors for PDO Grana Padano in Norway. Customers cite Gennaro Aurricchio and Lactalis as the top alternatives to Ambrosi and Gennaro Aurricchio as the top alternative to Ambrosi.

(733) Seventh, the views of market participants concerning the impact of the concentration on the level of competition in the supply of Italian cheese in Norway are not uniform. While half of them consider it neutral, the other half see it as negative. None of them, however, expressed concerns in relation to the supply of

(737) The Notifying Party argues that the concentration does not raise any competitive concerns under any potential market definition for the following reasons: (i) the increment brought about as a result of the concentration is modest; the combined market share is moderate (ii) the size of the market is small; (iii) there is competitive pressure from suppliers of similar cheeses; (iv) the combined entity will continue to face competition from a number of credible and well-established competitors including Zanetti, Trentin, Colla, Consorzio Virgilio, Biraghi, Caseria Bresciana, Jansen, and Marcin Goźliński Gomar; (v) the Parties cannot control the production of PDO Italian-type hard cheeses; (vi) retailers can easily switch suppliers; (vii) there are no barriers to entry and expansion; and (viii) retailers have strong bargaining power.

(738) The Commission finds the following:

(739) First, the combined market share of the Parties for PDO Grana Padano in the modern retail channel in Poland is not very high at [30-40]%.

(740) Second, Ambrosi sold limited volumes of PDO Grana Padano to the modern retail channel in Poland in 2021 ([volume]) and the concentration will bring a small increment of [0-5]% to Lactalis’ not very high share of [20-30]%. The concentration would result in an HHI delta that is substantially less than 150 (about [50-150]). This is below the indicative threshold under which concentrations are generally presumed not to be liable of impeding effective competition.

(741) Third, after the concentration, the combined entity will continue to face significant competitive pressure from other competitors. Polish customers and competitors state that Temar, Euroser, Jansen, Zanetti, Trentin, Colla, Lactalis, Granarolo, Zarpellon are important suppliers of PDO Grana Padano in Poland.

(742) Fourth, barriers to entry and expansion do not seem to be high in Poland. While five competitors considered entry to be difficult or very difficult, eight competitors considered it to be easy, very easy or medium. Similarly, six customers that expressed an opinion deemed the level of difficulty for customers to begin importing cheese from an Italian manufacturer not yet present in Poland to be easy, very easy or medium, while only one considered importing to be difficult. Respondents cite three entries or introductions of new types of Italian cheese to the Polish market in the last three years, namely by Stracchino, Euroser and Granarolo, the latter being a strong PDO Grana Padano supplier who supplies retailers directly.

(743) Fifth, from a logistical point of view, switching suppliers of PDO Grana Padano appears to be relatively easy for Polish customers since, due to the PDO requirements, these products are all produced in a limited area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(744) Sixth, six competitors of the Parties have indicated that, in case of an increase of the demand for PDO Grana Padano, they have the capacity to increase exports or start exporting PDO Grana Padano to new EEA countries. This includes significant PDO Grana Padano suppliers not yet present in Poland, such as Boni, Saviola or Ferrari Giovani. They would all be able to export PDO Grana Padano to the whole EEA. Zanetti would also have spare capacity to increase its exports of PDO Grana Padano to the EEA, including Poland, in case of a demand increase.

(745) Seventh, the PDO Grana Padano Consortium also plays an important role in growing the markets for PDO Grana Padano and thus attracting new entrants, by promoting this product outside of Italy, including in the EEA. This also applies to Poland: customers and competitors cite Granarolo as having entered the Polish market in the last three years. Granarolo’s product offer in Poland now also includes Grana Padano. The aim is to increase the knowledge about the product and its consumption abroad. The Consortium’s overall marketing budget, for Italy and abroad, is EUR 43 million for 2023 and includes extensive promotional campaigns through various media and across several countries. The target countries for 2023 include several EEA countries such as Germany, France, Spain and Belgium.

(746) Eighth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Poland. None of them expressed concerns in relation to the supply of PDO Grana Padano in Poland.

(747) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market on the market for the supply of PDO Grana Padano in the modern retail channel in Poland.

6.3.13.2. Parmigiano Reggiano

(748) Both Lactalis and Ambrosi supply PDO Parmigiano Reggiano in Poland. Based on the Parties’ market share estimates, their combined volume market share in the modern retail channel in 2021 is [30-40]% ([20-30]% Lactalis and [5-10]% Ambrosi).

(749) market share is moderate (iii) there is competitive pressure from suppliers of similar cheeses; (iv) the combined entity will continue to face competition from a number of credible and well-established competitors including Zanetti, Trentin, Colla, Consorzio Virgilio, Biraghi, Caseria Bresciana, Jansen, and Marcin Goźliński Gomar; (v) the Parties cannot control the production of PDO Italian-type hard cheeses; (vi) retailers can easily switch suppliers; (vii) there are no barriers to entry and expansion; and (viii) retailers have strong bargaining power.

(760) The Commission finds the following:

(761) First, the combined market share of the Parties for PDO Pecorino Romano in Poland is not very high ([20-30]%).

(762) Second, Ambrosi had modest sales of PDO Pecorino Romano in Poland in 2021 ([volume]).

(763) Third, after the concentration, the combined entity will continue to face significant competitive pressure from other competitors. Polish customers and competitors state that Michelangelo, Granarolo, Zanetti, and Colla are important suppliers of PDO Pecorino Romano in Poland.

(764) Fourth, as explained in paragraph (742), barriers to entry and expansion do not seem to be high in Poland. A majority of market participants considered entry and expansion into the Polish market and importing cheese from an Italian manufacturer not yet present in Poland to be easy, very easy or medium. In addition, with only 49 tonnes of PDO Pecorino Romano sold in Poland to modern retailers in 2021, the size of the market is small. Thus, also suppliers of PDO Pecorino Romano with lower output volumes could satisfy the need for PDO Pecorino Romano in Poland. Respondents cite three entries or introductions of new types of Italian cheese to the Polish market in the last three years, namely by Stracchino, Euroser and Granarolo, the latter being a strong PDO Pecorino Romano supplier who supplies retailers directly.

(765) Fifth, from a logistical point of view, switching suppliers of PDO Pecorino Romano appears to be relatively easy for Polish customers since, due to the PDO requirements, these products are all produced in a limited area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(766) Sixth, two significant suppliers of PDO Pecorino Romano, Ferrari Giovanni and Saviola, who are not yet present in Poland, have indicated that they would have the spare capacity and willingness to start exporting their PDO Pecorino Romano across the EEA, including Poland, should there be an increase in demand.

(767) Seventh, the Parties are not viewed as each other’s closest competitors. Only one respondent cites Ambrosi, while others mention Euroser, Colla, Vivaldi, Soresina,

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question H.M.9-2.

Questionnaire to customers, questions H.I.B.1 and H.I.B.2 and questionnaire to competitors, questions H.I.B.1 and H.I.B.2.

Questionnaire to competitors, question F.5.

Questionnaire to competitors, question C.A.3-6.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question H.M.9-2.

146

Form CO, paragraph 1010, and Parties’ response to RFI 7, paragraph 6.1.

152

(774) Second, the Parties would continue to face competition from other suppliers of taleggio in Poland, such as Zanetti.

(775) Third, there is potential for new suppliers of taleggio to come into the market in Poland.

(a) As indicated by the market investigation, it does not appear to be difficult for a manufacturer to enter the Polish markets for the supply of Italian cheeses, including taleggio. In particular, a majority of the customers that expressed an opinion held that it would be very easy, easy or medium to start importing Italian cheese from an Italian manufacturer not yet present in Poland. Similarly, a majority of competitors that expressed an opinion held that it would be very easy, easy or medium for an Italian manufacturer of cheese not yet present in Poland to start exporting Italian cheese to Poland, although a significant minority of the competitors held that this would be difficult or very difficult.

(b) With only 9.74 tonnes of taleggio sold in Poland overall in 2021, the size of the market is small. Thus, even suppliers of taleggio with lower output volumes could satisfy the needs of taleggio in Poland.

(c) Ambrosi does not manufacture taleggio and does not have its own distribution infrastructure in Poland but relies on third-party distributors. This shows that it is possible to enter and expand in the supply of taleggio in Poland without having specific distribution capabilities in Poland and without having specific production capabilities for taleggio.

(d) Several competitors of the Parties have indicated that, in case of an increase of the demand for taleggio, they have the capacity to increase exports or start exporting taleggio to the whole EEA.

(776) Fourth, from a logistical point of view, switching suppliers of taleggio appears to be relatively easy since these products are all produced in a certain area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(777) Fifth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Poland.

(778) Sixth, a significant supplier active in the sale of taleggio in Poland, namely Zanetti, has indicated that it would be possible and easy for a supplier already selling cheeses to supermarkets to start selling to the Ho.Re.Ca channel. Hence, post-merger, it appears as if the Parties, when selling taleggio to Ho.Re.Ca customers, would face competitive constraint also from companies supplying taleggio to the modern retail channel.

Questionnaire to competitors, question C.A.3.

Questionnaire to customers, question H.J.C.1.

Questionnaire to competitors and suppliers, question H.J.C.1.

Form CO, paragraph 759; Response to PN RFI 4, paragraph 11.6.

Questionnaire to competitors, question H.M.9.

Questionnaire to customers, question I.3; Questionnaire to competitors, question I.3.

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(783) The Commission finds the following:

(784) First, the combined market share of the Parties for PDO Pecorino Romano in Romania is not very high ([20-30]%).

(785) Second, Lactalis had minimal sales of PDO Pecorino Romano to the modern retail channel in Romania in 2021 ([volume]) and the concentration will bring a small increment of [0-5]% to Ambrosi’s not very high share of [20-30]%. The concentration would result in an HHI delta that is substantially less than 150 (about [0-50]). This is significantly below the indicative threshold under which concentrations are generally presumed not to be liable of impeding effective competition.

(786) Third, neither Lactalis nor Ambrosi are important suppliers of PDO Pecorino Romano in Romania: no market participant, including among Romanian customers, considered the Parties to be strong suppliers of this type of cheese in the Romanian market.

(787) Fourth, after the concentration, the combined entity will continue to face significant competitive pressure from other competitors, including strong suppliers such as Zanetti and Parmareggio.

(788) Fifth, from a logistical point of view, switching suppliers of PDO Pecorino Romano appears to be relatively easy for Romanian customers since, due to the PDO requirements, these products are all produced in a limited area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(789) Sixth, with only 35 tonnes of PDO Pecorino Romano sold in Romania to modern retailers in 2021, the size of the market is small. Thus, also suppliers of PDO Pecorino Romano with lower output volumes could satisfy the need for PDO Pecorino Romano in Romania.

(790) Seventh, two significant suppliers of Pecorino Romano, Ferrari Giovanni and Saviola, who are not yet present in Romania, have indicated that they would have the spare capacity and willingness to start exporting their Pecorino Romano across the EEA, including Romania, should there be an increase in demand.

(791) Eighth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Romania.

(792) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market on the market for the supply of PDO Pecorino Romano in the modern retail channel in Romania.

Horizontal Merger Guidelines, paragraph 20.

Questionnaire to customers, question H.M.1. and questionnaire to competitors, question H.M.1.

Questionnaire to competitors, question H.M.9.

Questionnaire to customers, question I.3; Questionnaire to competitors, question I.3.

156

(806) The Notifying Party argues that the concentration does not raise any competitive concerns under any potential market definition for the following reasons: (i) the market share increment is trivial; (ii) the combined market share is moderate (iii) there is competitive pressure from suppliers of similar cheeses; (iv) the combined entity will continue to face competition from a number of credible and well-established competitors including Ferrarini, Zanetti and Auricchio; (v) the segment size is small; (vi) retailers can easily switch suppliers; (vii) there are no barriers to entry and expansion; and (viii) retailers have strong bargaining power.

(807) The Commission finds the following:

(808) First, the combined market share of the Parties for PDO Pecorino Romano in the modern retail channel in Spain is below the 25% indicative threshold under which concentrations are generally presumed not to be liable of impeding effective competition.

(809) Second, Ambrosi had limited sales of Pecorino Romano in the modern retail channel in Spain in 2021 ([volume]) and the concentration will bring a small increment of [0-5]% to Lactalis’ not very high share of [20-30]%. The concentration would result in an HHI delta that is substantially less than 150 (about [0-50]). This is significantly below the indicative threshold under which concentrations are generally presumed not to be liable of impeding effective competition.

(810) Third, after the concentration, the combined entity will continue to face significant competitive pressure from other competitors. Spanish customers and competitors state that Garda, TGT, Negrini, Mammafiore, Valcoiberia Ferrarini, Granarolo, Aurichio, and Ferrari Giovanni are important suppliers of PDO Pecorino Romano in Spain.

(811) Fourth, from a logistical point of view, switching suppliers of PDO Pecorino Romano appears to be relatively easy for Spanish customers since, due to the PDO requirements, these products are all produced in a limited area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(812) Fifth, barriers to entry and expansion do not seem to be high in Spain for PDO Pecorino Romano. A majority of market participants considered entry and expansion to be very easy, easy or medium. Ten customers that expressed an opinion deemed the level of difficulty for customers to begin importing cheese from an Italian manufacturer not yet present in Spain to be easy, very easy or medium, while only one considered importing to be difficult. The views of competitors on how easy or difficult entry into the Spanish market were more mixed: while seven competitors considered entry to be difficult or very difficult,

Form CO, paragraph 1010, and Parties’ response to RFI 7, paragraph 6.1.

Horizontal Merger Guidelines, paragraph 18.

Horizontal Merger Guidelines, paragraph 20.

Questionnaire to customers, questions H.L.B.2 and questionnaire to competitors questions H.L.B.1.

Questionnaire to customers, question H.L.C.1. and questionnaire to competitors and suppliers, question H.L.C.1.

Questionnaire to customers, question H.L.C.1.

159

(823) Fifth, barriers to entry and expansion do not seem to be high in Spain for other Italian-type hard cheese. A majority of customers and competitors considered entry and expansion to be very easy, easy or medium. Ten customers that expressed an opinion deemed the level of difficulty for customers to begin importing cheese from an Italian manufacturer not yet present in Spain to be easy, very easy or medium, while only one considered importing to be difficult. The views of competitors on how easy or difficult entry into the Spanish market is were more mixed: while seven competitors considered entry to be difficult or very difficult,

Form CO, paragraph 1010, and Parties’ response to RFI 7, paragraph 6.1.

Questionnaire to customers, questions H.L.A.3 and H.L.A.4.

Questionnaire to customers, question H.LA; Questionnaire to competitors, question H.LA.

Questionnaire to competitors, question C.A.3-6.

Questionnaire to customers, question H.J.C.1. and questionnaire to competitors and suppliers, question H.J.C.1.

161

907 eight competitors considered it to be easy, very easy or medium. In addition, with only 87 tonnes of other Italian-type hard cheese sold in Spain to modern retailers in 2021, the size of the market is small. Thus, also suppliers of other Italian-type hard cheese with lower output volumes could satisfy the need for other Italian-type hard cheese in Spain.

(824) Sixth, four significant competitors of the Parties have indicated that, in case of an increase of the demand for other Italian-type hard cheese, they have the capacity to increase exports or start exporting this type of cheese to new EEA countries. BMI stated that it could start exporting to the Spanish market, while Biraghi, Granarolo and Zanetti, who already supply other Italian-type hard cheese in Spain, stated that they could increase their exports to the EEA, including Spain.

(825) Seventh, the Parties are not viewed as close competitors by market participants. The company most frequently cited by customers and competitors as the closest alternative to Lactalis for other Italian-type hard cheese in Spain is Zanetti, followed by Ferrarini and Hispano Italiana. Zanetti was also the company most frequently mentioned by customers and competitors as the closest alternative to Ambrosi for other Italian-type hard cheese, followed by Ferrarini and Auricchio.

(826) Eighth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Spain.

(827) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market on the market for the supply of other Italian-type hard cheese in the modern retail channel in Spain.

6.3.15.3. Mascarpone

(828) Both Lactalis and Ambrosi supply branded mascarpone in the modern retail channel in Spain. Lactalis supplies branded mascarpone in Spain via the Galbani and Castelli brands, whereas Ambrosi supplies it under the Ambrosi brand.

(829) As shown in Table 66, the combined market share of the Parties is equal to [40-50]% whereas the increment from Ambrosi is less than [0-5]%. The Notifying Party has been unable to attribute the remaining [50-60]% of market share to any specific competitors.

Questionnaire to competitors and suppliers, question H.J.C.1.

Questionnaire to competitors, question H.M.9.

Questionnaire to customers, question H.LA.5; Questionnaire to competitors, question H.LA.3.

Questionnaire to customers, question H.LA.6-1; Questionnaire to competitors, question H.LA.4.

Questionnaire to customers, question I.3; Questionnaire to competitors, question I.3.

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(840) The Commission finds the following:

(841) First, while the combined market share of the Parties is relatively high at [40-50]%, the increment added to Lactalis’ market share through the concentration is immaterial at only [0-5]% (and only about [volume] of ricotta sold by Ambrosi in 2021). The concentration would result in an HHI delta of significantly less than 150 (about [0-50]). This is substantially below the indicative threshold under which concentrations are generally presumed not to be liable of impeding effective competition.

(842) Second, there are a number of alternative suppliers of branded ricotta currently available to customers in Spain, including Granarolo and Zanetti.

(843) Third, the barriers to entry and expansion in the market for the supply of ricotta in Spain appear to be low.

(a) With only 141 tonnes of branded ricotta sold in Spain to modern retailers in 2021, the size of the market is small. Thus, also suppliers of ricotta with lower output volumes could satisfy the need for ricotta in Spain.

(b) The majority of both customers and competitors stated that it would be “very easy”, “easy” or “medium” to start importing Italian cheese products, such as branded ricotta, from an Italian manufacturer not yet present in Spain, taking into account all into account all barriers to entry that would be applicable.

(c) Five Italian manufacturers of ricotta and one Nordic third-party supplier stated that, in case of an increase of demand for ricotta, they would have the capacity to increase exports or start exporting ricotta to the whole of the EEA, including Spain.

(d) Ambrosi itself does not manufacture its own ricotta and relies on a third-party distributor in Spain. This shows that it is possible to enter and expand in the supply of mascarpone in Spain without having specific distribution capabilities in Spain and without having specific production capabilities for ricotta.

(844) Fourth, a majority of customers and competitors having expressed an opinion held that the concentration would have a neutral impact on their companies. Moreover, the majority of both customers and competitors that expressed an opinion stated that the concentration would have a positive or neutral impact on the level of competition in the wholesale distribution of Italian cheeses in Spain.

Form CO, paragraphs 1158-1159.

Horizontal Merger Guidelines, paragraph 20.

Questionnaire to competitors, question C.A.3.

However, it should be noted that the small size of the Spanish market for ricotta may also negatively affect the incentives to enter this market by manufacturers and other suppliers currently not yet active in Spain.

Questionnaire to competitors, question H.L.C.1, and questionnaire to competitors, question H.L.C.1.

Questionnaire to customers, question I.3; Questionnaire to competitors, question I.3.

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moderate market share of [20-30]%. The concentration would result in an HHI delta of significantly less than 150 (about [0-50]). This is substantially below the indicative threshold under which concentrations are generally presumed not to be liable of impeding effective competition.

(851) Second, after the concentration, the combined entity will continue to face significant competitive pressure from other competitors currently active in the market. Swedish customers and competitors have identified Granarolo, Di Luca, Wernersson, which seems to distribute in the Nordics the PDO Grana Padano of Michelangelo, and private label suppliers as main suppliers of this cheese in Sweden.

(852) Other significant suppliers of PDO Grana Padano, namely Zanetti, Tine and Produttori latte associate Cremona, have also submitted that they sell this product in Sweden.

(853) Third, a number of strong competitors of the Parties are active in the supply of PDO Grana Padano in neighbouring markets (Norway, Denmark and Finland) and could easily and promptly enter the Swedish market. This is relevant because a majority of competitors submit that there are no or not particularly significant differences between consumer preferences and conditions of competition for the supply of Italian cheeses across Denmark, Sweden, Norway and Finland. PDO Grana Padano competitors active in neighbouring countries include: (i) in Denmark, Zanetti, Granarolo, Tine SA and Produttori latte associati Cremona; (ii) in Finland, Ferrari Giovani, Produttori latte associati Cremona, Granarolo and Zanetti; and (iii) in Norway, Zanetti. Namely, Tine confirms that it would be easy to enter the Swedish market.

(854) Fourth, six competitors of the Parties have indicated that they would have the spare capacity and willingness to increase their exports or start exporting their PDO Grana Padano across the EEA, including Sweden, should there be an increase in demand. This includes significant PDO Grana Padano suppliers not yet present in Sweden, such as Saviola or Boni. Significant PDO Grana Padano suppliers already present in Sweden, like Zanetti, would also have spare capacity to increase exports to the EEA, including Sweden. Namely Zanetti has explained that it is in the process of expanding its production capacity for the manufacture of PDO Grana Padano by 15%-20% to respond to demand increases in recent years.

(855) Fifth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Sweden. None of the customers and competitors who responded that the impact would be negative

Horizontal Merger Guidelines, paragraph 20.

See Grana Padano Michelangelo as Wernersson Ost.

Questionnaire to customers, question H.K.C.1.

Questionnaire to competitors, question C.A.3-6.

Questionnaire to competitors, question F.5.

Questionnaire to competitors, question C.A.3-6.

Questionnaire to competitors, question H.K.D.1.

Questionnaire to competitors, question H.M.9.

Minutes of the call with a competitor on 4 January 2023, para. 27.

Questionnaire to customers, question I.3; Questionnaire to competitors, question I.3.

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Parmigiano Reggiano, Zanetti, as well as Tine, have also submitted that they sell this product in Sweden.

(861) Second, a number of strong competitors of the Parties are active in the supply of PDO Parmigiano Reggiano in neighbouring markets (Norway, Denmark and Finland) and could easily and promptly enter the Swedish market. On one hand, a majority of competitors submit that there are no or not particularly significant differences between consumer preferences and conditions of competition for the supply of Italian cheeses across Denmark, Sweden, Norway and Finland. PDO Parmigiano Reggiano competitors active in neighbouring countries include: (i) in Denmark, Granarolo and Zanetti; (ii) in Finland, Ferrari Giovani, Produttori latte associati Cremona, Granarolo and Zanetti; and (iii) in Norway, Zanetti.

(862) Third, Parmigiano Reggiano suppliers will have spare and increasing capacity to export their production. Namely, eight competitors of the Parties have indicated that they would have the spare capacity and willingness to increase their exports or start exporting their PDO Parmigiano Reggiano across the EEA, including Sweden, should there be an increase in demand. This includes significant PDO Parmigiano Reggiano suppliers not yet present in Sweden, such as Ferrari Giovanni, Saviola or Boni. They would all be able to export PDO Parmigiano Reggiano to the whole EEA. Significant PDO Parmigiano Reggiano suppliers already present in Sweden, like Zanetti or Granarolo would also have spare capacity to increase exports to the EEA, including Sweden.

(863) Fourth, when asked who they would buy PDO Parmigiano Reggiano from if they could not buy from Lactalis, Swedish customers mentioned Granarolo, Savencia, Ferrari Giovanni and Caseifici Granterre as alternatives. The same suppliers, as well as Zanetti, were identified by Swedish customers when asked who they would turn to in case they could not buy their PDO Parmigiano Reggiano from Ambrosi.

(864) Fifth, a majority of customers and competitors having expressed an opinion indicated that the concentration would have a neutral impact on the level of competition in the wholesale distribution of Italian cheese in Sweden. None of the customers and competitors who responded that the impact would be negative have expressed concerns specifically with regard to the supply of PDO Parmigiano Reggiano in Sweden.

(865) Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market on the market for the supply of PDO Parmigiano Reggiano to the modern retail channel in Sweden.

Questionnaire to competitors, question C.A.3-6.

Questionnaire to competitors, question F.5.

Questionnaire to competitors, question C.A.3-6.

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question H.M.9.

Questionnaire to customers, question H.K.A.5-1.

Questionnaire to customers, question H.K.A.6-1.

Questionnaire to customers, question I.3; Questionnaire to competitors, question I.3.

Questionnaire to customers, question I.4; Questionnaire to competitors, question I.4.

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Luca & Di Luca, Wernersoon, Goldsteig, Granarolo, and Soresina; (v) customers can easily switch suppliers; (vi) there are no significant barriers to entry and expansion; (vii) retailers have bargaining power; and (viii) there is competitive pressure from suppliers of similar cheeses.

(877) The Commission finds the following:

(878) First, while the combined market share of the Parties is not very high at [30-40]%, the increment added to Lactalis’ market share through the concentration is immaterial at only [0-30]% (and only about [volume] of mascarpone sold by Ambrosi in 2021). The concentration would result in an HHI delta of significantly less than 150 (about [0-50]). This is substantially below the indicative threshold under which concentrations are generally presumed not to be liable of impeding effective competition.

(879) Second, there are a number of alternative suppliers of mascarpone currently available to customers in Sweden, including Tine SA, Granarolo and Zanetti.

(880) Third, a majority of customers that expressed an opinion are of the view that the concentration would have a neutral or positive impact on the level of competition in the wholesale distribution of Italian cheeses in Sweden. Similarly, a majority of responding competitors found that the concentration’s impact in this regard would be neutral.

(881) Based on the above considerations, the Commission considers that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of branded mascarpone to the modern retail channel in Sweden.

6.3.16.5. Ricotta

(882) Both Lactalis and Ambrosi supply small amounts of branded and private label ricotta in the modern retail channel in Sweden.

(883) As shown in Table 72, the combined market share of the Parties in the supply of private label ricotta to modern retailers in Sweden is equal to [20-30]% whereas the increment from Ambrosi is less than [0-5]%. The Notifying Party has not attributed the remaining [70-80]% of market share to any specific competitors.

Form CO, paragraph 750.

Horizontal Merger Guidelines, paragraph 20.

Questionnaire to competitors, question C.A.3.

Questionnaire to customers, question I.3.

Questionnaire to competitors, question I.3.

172

(894) First, none of the market participants identified Lactalis or Ambrosi as important suppliers of taleggio in Sweden. Instead, Falbygdens (Arla), Skåne Meijerierna, Ciresa, Wernersson and Engelmanns have been identified in the market investigation by competitors and customers as main suppliers of taleggio Sweden. The Parties would thereby continue to face competition from other suppliers of taleggio in Sweden. Furthermore, TINE SA, Zanetti and Granarolo have indicated that they supply taleggio in Sweden. The Commission has thus through the market investigation identified other competing suppliers of taleggio in Sweden in addition to those identified by the Parties.

(895) Second, when asked who they would buy taleggio from if they could not buy from Lactalis, Swedish customers mentioned Cireca, Tage Lindblom, Defendi and Mauri as alternatives. The same suppliers were identified by Swedish customers when asked who they would turn to in case they could not buy their taleggio from Ambrosi. This indicates that the Parties are not close competitors in the supply of taleggio in Sweden.

(896) Third, upstream the Parties only produce a relatively limited amount of the total volume of taleggio sold in the EEA and elsewhere. In particular, Lactalis’ production share for taleggio was equal to only around [5-10]% in 2022, whereas Ambrosi does not produce taleggio at all and instead only resells taleggio produced by third-parties. Therefore, the concentration will not result in a bottleneck at the production level and retail customers in Sweden will be able to import taleggio from a range of manufacturers independent from the Parties.

(897) Fourth, there is potential for new suppliers of mascarpone to come into the market in Sweden. With only 39.6 tonnes of taleggio sold to the OOH channel in Sweden overall in 2021, the size of the market is small. Thus, even suppliers of taleggio with lower output volumes could satisfy the needs of taleggio in the OOH channel in Sweden. This also means that the the Parties’ market positioning is not entrenched, as limited sales would allow competitors to capture large portions of the market and since the switch of an important customer could reshuffle market shares.

(898) Furthermore, from a logistical point of view, switching suppliers of taleggio appears to be relatively easy since, due to the PDO requirements, these products are all produced in a certain area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs.

(899) In addition, Ambrosi does not manufacture its own taleggio and does not have its own distribution infrastructure in Sweden but relies on third-party distributors. This shows that it is possible to enter and expand in the supply of taleggio in Sweden without having specific distribution capabilities in Sweden and without having specific production capabilities for taleggio.

Questionnaire to customers, questions H.K.B.1-H.K.B.2; Questionnaire to competitors, question H.K.B.1-H.K.B.2.

Questionnaire to competitors, question C.A.3.

Questionnaire to customers, question H.K.B.5.

Questionnaire to customers, question H.K.B.6.

The Notifying Party’s response to RFI 9, question 1.

Form CO, paragraph 759; Response to PN RFI 4, paragraph 11.6.

175

(900) However, a majority of customers found that, in case of a lasting and significant (5-10%) increase of the wholesale price for taleggio in Sweden, it would be very unlikely for customers to import taleggio from alternative suppliers currently not offered in Sweden. Nevertheless, when asked how easy or difficult it would be for customers to start importing Italian cheese products from an Italian manufacturer not yet present in Sweden, a majority of customers having expressed an opinion answered that it would be “easy” or “medium”. Moreover, while some of the responding competitors indicated that it would be difficult or very difficult to enter the Swedish market, approximately the same number of competitors indicated that this would be very easy, easy or medium. The results of the market investigation are thus inconclusive in this regard.

(901) Nevertheless, several competitors of the Parties have indicated that, in case of an increase in the demand for taleggio, they have the capacity to increase exports or start exporting taleggio. This includes a competitor already supplying taleggio in Sweden.

(902) Fifth, a majority of customers that expressed an opinion are of the view that the concentration would have a neutral or positive impact on the level of competition in the wholesale distribution of Italian cheeses in Sweden. Similarly, a majority of responding competitors found that the concentration’s impact in this regard would be neutral.

(903) Sixth, significant suppliers active in the sale of taleggio in Sweden, namely TINE SA, Zanetti and Granarolo, have indicated that it would be possible and easy for a supplier already selling cheeses to supermarkets to start selling to the Ho.Re.Ca customers. Hence, post-merger, it appears as if the Parties, with regard to the supply of taleggio to Ho.Re.Ca customers in Sweden, would face competitive constraint also from companies supplying taleggio to the modern retail channel in Sweden.

(904) In conclusion, in light of the above, the Commission finds that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of PDO taleggio to the OOH channel in Sweden.

6.3.16.7. Gorgonzola

(905) The Parties’ combined market share in the supply of PDO gorgonzola to the OOH channel in Sweden is [20-30]%, with an increment of [5-10]%. The Notifying Party has not attributed the remaining [70-80]% of the market shares to any specific other competitors.

Questionnaire to customers, question H.K.B.7.

Questionnaire to customers, question H.K.D.1.

Questionnaire to customers, question I.3.

Questionnaire to competitors, question I.3.

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(900) in Sweden without having specific distribution capabilities in Sweden and without having specific production capabilities for gorgonzola.

(c) Several competitors of the Parties have indicated that, in case of an increase of the demand for gorgonzola, they have the capacity to increase exports or start exporting gorgonzola to the whole EEA. This includes competitors already supplying gorgonzola in Sweden.

(911) Fourth, from a logistical point of view, switching suppliers of gorgonzola appears to be relatively easy since these products are all produced in a certain area in Italy and, therefore, the Italian premises of all cheese producers are located close to each other. This means that, in terms of logistics, transportation could easily be arranged from different competitors’ production sites in the same area without significant effort or costs. A competitor explained that it “normally uses distributors to sell its Gorgonzola abroad and either the distributor or the retailer puts together in one truck the products from different Italian suppliers to reduce their logistics costs.”

(912) Fifth, a majority of customers that expressed an opinion are of the view that the concentration would have a neutral or positive impact on the level of competition in the wholesale distribution of Italian cheeses in Sweden. Similarly, a majority of responding competitors found that the concentration’s impact in this regard would be neutral. One gorgonzola competitor stated that “the concentration does not raise any concerns and may be even positive for the Italian cheese industry.”

(913) Sixth, significant suppliers active in the sale of gorgonzola in Sweden, namely TINE SA, Igor, Zanetti and Granarolo, have indicated that it would be possible and easy for a supplier already selling cheeses to supermarkets to start selling to the Ho.Re.Ca channel. Hence, post-merger, it appears as if the Parties, with regard to the supply of gorgonzola to Ho.Re.Ca customers in Sweden, would face competitive constraint also from companies supplying gorgonzola to the modern retail channel in Sweden.

(914) In conclusion, in light of the above, the Commission finds that the concentration does not raise serious doubts as to its compatibility with the internal market with regard to the plausible market for the supply of gorgonzola to the OOH channel in Sweden.

6.4. Conglomerate effects

(915) During the market investigation, some retail customers and competitors voiced concerns that Lactalis could use its broad product portfolio (which includes a wide range of cheese types and important cheese brands) as anticompetitive leverage

Questionnaire to competitors, question H.M.9.

Questionnaire to competitors, question C.A.3.

Minutes of a call with a competitor on 13 January 2023, paragraph 26.

Questionnaire to customers, question I.3.

Questionnaire to competitors, question I.3.

Minutes of a call with a competitor on 13 January 2023, paragraph 24.

Questionnaire to suppliers and competitors, questions D.D.5 and C.A.3.

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when negotiating terms and conditions with supermarkets and other retailers, and in order to foreclose rival suppliers of cheese with a narrower cheese portfolio.

(916) The Commission has considered whether, as a result of the concentration, the Parties may have the ability and incentive to engage in anticompetitive bundling or tying in order to foreclose rivals and/or to use its wide product portfolio as leverage to increase prices to its retail customers. The Commission found that the concentration would not add any additional important cheese types (or other products) to Lactalis’ portfolio, as the vast majority of products offered by Ambrosi are already offered by Lactalis pre-concentration. In addition, as outlined in Section 6.3, the Commission has concluded that the concentration does not result in any significant impediment of effective competition on the horizontally overlapping markets.

(917) Given that the concentration does not significantly increase Lactalis’ portfolio of cheeses and given that the concentration does not lead to a substantial increase in market power in any of the horizontally overlapping markets in which Lactalis is already active in before the concentration, the concentration does not significantly change Lactalis’ ability or incentives to bundle or tie its products and brands in order to foreclose rivals and/or to use its wide product portfolio as leverage to increase prices to its retail and OOH customers.

(918) Therefore, the Commission finds that the specific effects of the present concentration are not such as to raise serious doubts in relation to potential conglomerate effects.

7. CONCLUSION

(919) 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

Questionnaire to customers, question I.2, questionnaire to competitors, question I.2.

There are some minor exceptions to this, such as buffalo camembert which is re-sold by Ambrosi but not currently offered by Lactalis. See also: Form CO, paragraphs 1331-1344.

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