Probe launched

Commission fears Cargill’s ADM chocolate buy could lead to price hikes

By Oliver Nieburg contact

- Last updated on GMT

Commission to probe Cargill’s ADM chocolate buy
Commission to probe Cargill’s ADM chocolate buy

Related tags: Belgium, Cocoa butter, Cocoa solids

The European Commission has opened an in-depth investigation into Cargill’s proposed acquisition of ADM’s industrial chocolate business amid concerns it could lead to price increases.

A preliminary investigation by the Commission cited possible competition worries in Germany and the UK, where Cargill and Barry Callebaut are the main suppliers of industrial chocolate.

Reduced choice of suppliers?

“The proposed transaction could eliminate an important competitor and reduce the choice of suitable suppliers in already concentrated markets, which could lead to price increases,”​ said the Commission in a release.

The investigation found that several smaller industrial chocolate suppliers had only a limited presence and posed an insufficient competitive constraint on Cargill and Barry Callebaut.

Cargill’s $440m proposal

Cargill announced it was to acquire all six of ADM’s chocolate plants​ as well as the Ambrosia, Merckens and Schokinag brands for $440m in September last year.

The deal excluded ADM’s capacity to produce semi-finished chocolate products such as cocoa butter and powder, which was later sold to Olam.

industrial choc market share callebaut 2013
Industrial chocolate market share before Cargill's ADM acquisition. Source: Barry Callebaut 2013 financial results

If the ADM deal clears, Cargill will keep its lead over Blommer but Barry Callebaut will remain the global market leader. Analysts previously said the deal would create “a duopoly” ​and a “two horse race”​ in industrial chocolate.

The Commission has 90 working days up until 8 July 2015 to investigate.

Related topics: Ingredients, Chocolate

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