The German Federal Cartel Office ("BKartA") this week published its reasoning behind the clearance decision relating to the acquisition of Nadler Group ("Nadler") by Heiner Kamps Beteiligungsgesellschaft mbH, which already owns Homann Feinkost GmbH ("Homann"), earlier this month.
Nadler produces private label and branded chilled fine food products, in particular focusing on prepared salads and prepared fish products. Homann also produces prepared salads and prepared fish products, although it has in the past focused predominantly on prepared potato and cold meat salads.
Through the acquisition, Homann and Nadler will together obtain a leading position in the market for the production of chilled fine prepared foods in Germany, with an estimated share of approximately 30 - 40% in the prepared salads market and approximately 30 - 40% in the prepared fish products market.
SJB advised on competition matters concerning the transaction, with Dr. Alexander Rinne and Tilman Siebert, Partners in the Munich office, leading the team.
In its decision, the BKartA defined the relevant market as the market for the production and distribution of chilled fine foods in Germany, but left open the question of whether this market should be further segmented into separate markets for each of:
- private label products and branded products;
- pre-packaged products and open-sale products; and
- sales to food retailers and sales to the larger food-services industry.
The BKartA decided that private label and branded products are in strong competition with each other and should not be further separated for competition reasons. Such products are in immediate competition with each other, particularly when analysing the demand side substitutability to end consumers. The market was found to be national in scope.
Producers of chilled fine foods each produce a variety of products, including private label products for retailers as well as branded food products. Private label fine foods are present in all areas of the market, thereby competing against branded products in all segments of the market (including in the premium segment). This point had previously been left open by the BKartA.
The BKartA reached the conclusion that, despite Homann's and Nadler's leading position on the German market following the acquisition, the transaction would not lead to the creation or strengthening of a dominant position, as there is strong competition in the market and the following safeguards are in place:
- The market is characterised by other well-known brands and strong competitors that have considerable over-capacity available;
- The parties face strong competition from food retailers' own private label products;
- Food retailers position their private labels against branded products in all segments of the market and compete vigorously on all pricing segments, including in the branded premium segment;
- Although a combined Homann and Nadler entity has high market shares, their respective contracts with retailers are usually of a short duration and are negotiated regularly, ensuring that customers retain flexibility to switch; and
- The market is fluid and there are no established market positions. Competitors can switch productions easily and can compete in all segments of the market.
Additionally, the parties' counterparts in the market include large food retailers which could easily switch to a different supplier.
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