EUROPEAN COMMISSION DG Competition

Only the English text is available and authentic.

REGULATION (EC) No 139/2004 MERGER PROCEDURE

Article 4(4) Date: 17/09/2021

EUROPEAN COMMISSION

Brussels, 17.9.2021 C(2021) 6912 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 Where possible the information omitted has been replaced by ranges of figures or a general description.

Cinven Capital Management (VII) General Partner Limited Level 4, Mill Court, Le Charotterie St Peter Port, Guernsey GY1 1EJ

Fressnapf Beteiligungs GmbH c/o Fressnapf Holding SE Westpreußenstraße 32-38 47809 Krefeld Germany

Autorità Garante della Concorrenza e del Mercato Piazza Giuseppe Verdi, 6a 00198 Roma Italy

Subject: Case M.10409 – Cinven/Fressnapf/Agrifarma/Maxi Zoo Italia Commission decision following a reasoned submission pursuant to Article 4(4) of Regulation No 139/2004and Article 57 of the Agreement on the European Economic Areafor referral of the case to Italy.

1OJ 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.

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

Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË

Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.

Date of filing: 20 August 2021 Legal deadline for response of Member States: 10 September 2021 Legal deadline for the Commission decision under Article 4(4): 24 September 2021

Dear Sir or Madam,

1. INTRODUCTION

(1) On 20 August 2021, the Commission received by means of a reasoned submission (the ‘Reasoned Submission’) a referral request pursuant to Article 4(4) of the Merger Regulation with respect to the transaction cited above. The parties request the operation to be examined in its entirety by the competent authorities of Italy.

(2) According to Article 4(4) of the Merger Regulation, before a formal notification has been made to the Commission, the parties to the transaction may request that their transaction be referred in whole or in part from the Commission to the Member State where the concentration may significantly affect competition and which present all the characteristics of a distinct market.

(3) A copy of this Reasoned Submission was transmitted to all Member States on 20 August 2021.

(4) By way of a letter dated 9 September 2021, the Autorità Garante della Concorrenza e del Mercato (the ‘AGCM’) as the competent authority of Italy informed the Commission that Italy agrees with the proposed referral.

2. THE PARTIES

(5) Cinven Capital Management (VII) General Partner Limited (“Cinven”) is part of the Cinven Group. The Cinven Group is an international private equity business headquartered in the UK. Cinven is engaged in the provision of investment management and investment advisory services to a number of investment funds.

(6) Fressnapf Beteiligungs GmbH (“Fressnapf”) is a private holding firm heading the Fressnapf Group. Fressnapf is headquartered in Germany and supplies pet care products (e.g. pet food and accessories, pets and zoological supplies) at retail level through over 1 800 stores located throughout the EEA.

(7) Agrifarma S.p.A. (together with its subsidiaries, “Arcaplanet”) is headquartered in Italy and operates an omnichannel pet care brand in Italy. Arcaplanet offers pet care products (e.g. pet food, accessories, health and grooming), including through its own brands.

(8) Maxi Zoo Italia S.p.A. (“Maxi Zoo Italia”) is the Italian wholly-owned subsidiary of Fressnapf. Maxi Zoo Italia runs a retail store chain active in the supply of pet specialty products (e.g. pet food and accessories, pets and zoological supplies) at retail level through 131 stores located in Italy.

(9) Cinven and Fressnapf will hereinafter be referred to together as “the Notifying Parties”.

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3. THE OPERATION AND CONCENTRATION

(10) Cinven and Fressnapf – via the newly incorporated company Shiba Bidco S.p.A. (Bidco) – intend to acquire joint control over Arcaplanet and Maxi Zoo Italia (the “Proposed Transaction”). The Proposed Transaction will be implemented by means of two separate and interrelated share purchase agreements executed on 24 June 2021.

(11) It follows that the Proposed Transaction would result in a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

4. UNION DIMENSION

(12) The undertakings concerned have a combined aggregate worldwide turnover of more than EUR 5 000 million, and Cinven, Fressnapf and Arcaplant have an EU-wide turnover in excess of EUR 250 million. While Arcaplanet and Maxi Zoo Italia achieve more than two-thirds of its Union-wide turnover in Italy, Cinven and Fressnapf do not achieve more than two-thirds of their respective Union-wide turnover within one and the same Member State.

(13) Therefore, the concentration has a Union dimension within the meaning of Articles 1(2) of the Merger Regulation.

5. RELEVANT MARKETS

(14) The Notifying Parties submit that the Proposed Transaction gives rise to horizontal overlaps, as Arcaplanet and Maxi Zoo Italia are both active in the markets for the retail sale of pet products (including pet food, pet care and accessories) in Italy.

5.1. Product markets

(15) In its decisional practice, the Commission has considered that the industrial pet food industry is characterised by a broad range of retail outlets.In these decisions, the Commission identified two channels of distribution, namely (i) grocery outlets (such as major supermarkets chains) and (ii) specialist outlets (pet shops and pet superstores, veterinarians, breeders, garden centres, rural stores and Do It Yourself).

(16) In Masterfoods/Royal Canin, the Commission considered that – while each of these distribution channels has its own features and specificities – products sold through these two channels formed part of an overall market, in which there are alternative routes to reach the end consumer (i.e. the pet owner).

(17) More recently, in Mars/Anicura , the Commission identified a distinct product market for the retail sale of dietetic pet food through the veterinary channel, separate from the retail sale of dietetic pet food via other channels, due to the specificities of dietetic pet products.

3Case COMP/M. 2337, Nestle/Ralston Purina, 27 July 2001 and Case COMP/M. 2554, Masterfoods/Royal Canin, 15 February 2002.

4The Commission specified that specialist outlets are a heterogeneous group of retail outlets including shops that do not somehow ‘specialise’ in pet food (e.g. DIY shops, farmer shops, garden centres etc).

5Case COMP/M. 2554, Masterfoods/Royal Canin, 15 February 2002, para. 22.

6Case COMP/M. 9019, Mars/Anicura, 29 October 2018.

(18) At national level, in Noah 2/Mondial Pet, the Italian Competition Authority held that independent traditional pet shops and pet shop chains can be considered as part of the same relevant market.On the other hand, the Italian Competition Authority found limited substitutability for consumers between pet shops and large-scale distribution chains and held that – within the latter category – only hypermarkets (with a sales area of more than 2 500 sqm) seemed capable of exerting effective competitive pressure on specialised shops.

(19) In the 2020 decision Peninsula Holding-Azimut Libera Impresa/D.M.O Pet care, the Italian Competition Authority considered whether large-scale distribution chains and online sales form part of the overall market for the retail sale of pet products, but ultimately left the precise definition of the product market open.

5.2. Geographic markets

(20) In its decisional practice, the Commission has considered that at the wholesale level the industrial pet food markets are national in scope. The Notifying Parties agree and point out that the market investigation in Nestlé/Ralston Purina suggested, inter alia, that the purchasing pattern even of internationally active retailers is still predominantly national and that significant price differences and market structures exist between Member States.

(21) The Notifying Parties submit that this conclusion was largely confirmed by the Commission’s findings in Masterfoods/Royal Canin, where the Commission considered that price differences both at wholesale level and at retail level, whilst less pronounced than some years before, still reflect domestic patterns and vary in a significant way from one Member State to the other.

(22) More recently, the market investigation in Mars/Anicura showed that the geographic dimension of the markets for retail sale of dietetic pet food via the veterinary channel was local in scope.

(23) In its own national decisional practice, the Italian Competition Authority’s decision in Noah 2/Mondial Pet considered that the retail sale of pet products in specialised shops had a local geographic dimension based on catchment areas around each shop location.This approach was confirmed in Peninsula Holding-Azimut Libera Impresa/D.M.O. Pet Care.

6. AFFECTED MARKETS

(24) The Notifying Parties estimate that their combined market share would be in excess of 20% in over […] horizontally affected potentially relevant local markets for the

7AGCM, decision no. 27148 dated 24 April 2018, Case C12139 – Noah 2/Mondial Pet Distribution.

8AGCM decision no. dated 22 December 2020, Case C12340 - Peninsula Holding-Azimut Libera Impresa/D.M.O. Pet Care.

9Case COMP/M. 2337, Nestle/Ralston Purina, 27 July 2001 paras. 20-31.

10Case COMP/M. 2554, Masterfoods/Royal Canin, 15 February 2002, para. 27.

11Case COMP/M. 9019, Mars/Anicura, 29 October 2018, paras. 49-50.

retail sale of pet products in specialised shops. The Parties’ estimated combined market share would be in excess of 30% in over […] of these potentially relevant local markets, over 40% in […] and over 50% in […] of them.

(25) On the basis of the information available to the Commission, the Proposed Transaction does not give rise to any affected markets at the wholesale level.

7. ASSESSMENT OF THE REFERRAL REQUEST

7.1. Legal requirements

(26) Pursuant to Article 4(4) of the Merger Regulation, the following two legal requirements must be fulfilled for a referral to be made by the Commission to one or more Member States prior to notification at the request of the Notifying Party:

a) the market(s) in question must be within a Member State and present all the characteristics of a distinct market.

b) there must be indications that the concentration may significantly affect competition in a market or markets,and

(27) With regard to the first requirement, and in line with the precedents discussed above in paragraphs (22)-(23), the Commission considers that the relevant markets for the retail sale of pet products (i.e., inter alia, pet food, pet care and accessories) in specialised shops are national or smaller than national in scope. The Proposed Transaction would thus not lead to any affected markets that could be wider than Italy, or to any affected markets outside Italy. Furthermore, the markets in question present all the characteristics of distinct markets because the conditions of competition on these markets are clearly distinguishable from those in other markets, especially with respect to markets for the retail supply of pet products in other EEA Contracting Parties.

(28) Therefore, the first legal requirement set forth by Article 4(4) of the Merger Regulation is met.

(29) With regard to the second requirement, and in light of the information submitted by the Parties in the Reasoned Submission, the Proposed Transaction may significantly affect competition in the potentially relevant markets for the retail supply of pet products, always in relation to certain local geographic markets located exclusively within Italy.

(30) Specifically, the Notifying Parties submit that, at the local catchment area level, there are possibly more than […] affected markets in Italy. In each of these markets, the Parties’ estimated combined market share ranges from [20-30]% to [50-60]%. In light of the substantial market shares of the merged entity in numerous catchment areas, there are indications that the concentration may significantly affect competition in a number of potentially relevant markets.

14Further developed in point 18 of the Commission’s Notice on Case Referral in respect of concentrations (OJ C 56, 5.3.2005, p. 2) (the ‘Notice’).

15Further developed in point 17 of the Notice.

(31) Therefore, the second legal requirement set forth in Article 4(4) of the Merger Regulation is met.

7.2. Additional factors

(32) In addition to the verification of the legal requirements, point 19 of the Notice provides that it should also be considered whether referral of the case is appropriate, and in particular whether the competition authority or authorities to which they are contemplating requesting the referral of the case is the most appropriate authority for dealing with the case.

(33) In addition, point 23 of the Notice states that consideration should also, to the extent possible, be given to whether the NCA(s) to which referral of the case is contemplated may possess specific expertise concerning local markets, or be examining, or about to examine, another transaction in the sector concerned.

(34) In this case, the Commission considers, first, that the effects of the Proposed Transaction are likely to be confined to Italy and, in light of the information submitted in the Reasoned Submission, will have their main economic impact in Italy. None of the plausible potentially affected markets is wider than national in scope and all of them are located in Italy. Therefore, the AGCM is well placed to examine the case.

(35) Second, the AGCM has considerable experience in reviewing cases concerning the retail of pet products and, as a result, has substantial experience and expertise in examining the markets in question.Therefore, the AGCM is well equipped to assess the impact of the Proposed Transaction on competition in the markets in question.

(36) Third, the requested referral would preserve the ‘one-stop shop’ principle, as this case would be referred in its entirety to a single competition authority, which is an important factor of administrative efficiency.

7.3. Conclusion on referral

(37) In the light of the foregoing and on the basis of the information provided by the Notifying Parties in the Reasoned Submission, the Commission concludes that the case meets the legal requirements set out in Article 4(4) of the Merger Regulation in that the concentration may significantly affect competition in a market or markets within a Member State which present(s) all the characteristics of a distinct market.

(38) Moreover, the requested referral would be consistent with points 19-23 of the Notice, in particular because the AGCM appears to be the most appropriate authority to examine the Proposed Transaction.

8. CONCLUSION

(39) For the above reasons, and given that Italy has expressed its agreement, the Commission has decided to refer the transaction in its entirety to be examined by

16 See, e.g., AGCM, decision no. 27148 dated 24 April 2018, Case C12139 – Noah 2/Mondial Pet Distribution and AGCM decision no. dated 22 December 2020, Case C12340 - Peninsula Holding-Azimut Libera Impresa/D.M.O. Pet Care.

Italy. This decision is adopted in application of Article 4(4) of the Merger Regulation and Article 57 of the EEA Agreement.

For the Commission

(Signed) Olivier GUERSENT Director-General

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