The Commission accepted the acquisition subject to conditions last Friday following a sixth month investigation.
‘Effective competition will continue’
"Chocolate is a sweet yet serious business and we want to ensure that consumers will not have to pay more for their favorite chocolate sweets, biscuits and ice cream. With Cargill's divestment of ADM's industrial chocolate plant in Mannheim the Commission is confident effective competition will continue,” said Commissioner Margrethe Vestager, in charge of competition policy.
Cargill announced it had reached a deal to buy ADM industrial chocolate arm for $440m in September 2014 in a deal helps Cargill extend its lead in industrial chocolate over Blommer, but it will still trail the market leader Barry Callebaut on volume sales.
Cargill accepts conditions
Cargill’s ADM deal initially included three chocolate, compound and liquor factories in North America - Milwaukee (Wis.), Hazleton (Penn.) and Georgetown (Ontario) and three chocolate and compound production sites in Europe - Liverpool (U.K.), Manage (Belgium) and Mannheim (Germany). Cargill now says it will divest the German plant.
ADM Cocoa out of chocolate
ADM’s is now completely out of the cocoa and chocolate business after it agreed to sell its cocoa presses to Singapore-based Olam for $1.3bn. The deal was approved by the European Commission last month.
“The facility will be kept as a separate entity with its own interim management until an agreement with a prospective buyer has been made,” said Cargill in a release.
Over 650 employees from ADM’s chocolate business will now transfer to Cargill as well as ADM’s Ambrosia, Merckens and Schokinag brands.
In its investigation the Commission said the proposed transaction would “eliminate an important competitor and reduce the choice of suitable suppliers in already concentrated markets, which could lead to price increases especially for small and mid-sized customers”.
However, the Commission was confident Barry Callebaut’s strong market share in Belgium, France and the UK caused no competition concerns in these geographies.
The Commission also found no competition concerns from Cargill’s position in cocoa markets and in compound chocolate as there were a sufficient number of alternative suppliers.
Cargill has now overcome all regulatory hurdles and can finalize the deal after previously receiving the green lights from the U.S. Department of Justice.