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

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.​​

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.