`Spain’s Competition Watchdog Says Deoleo-Hojiblanca Deal Could Harm Competition - Olive Oil Times
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Spain’s Competition Watchdog Says Deoleo-Hojiblanca Deal Could Harm Competition

By Julie Butler
Jan. 10, 2013 08:13 UTC

Spain’s com­pe­ti­tion com­mis­sion sees poten­tial prob­lems with a pro­posed deal giv­ing Spanish food giant Deoleo con­trol of the Hojiblanca extra vir­gin olive oil brand and the huge Hojiblanca coop­er­a­tive group a 9.63 per­cent stake in Deoleo.

In a January 9 press release the National Competition Commission (CNC) said it had decided an in-depth analy­sis of the con­cen­tra­tion was needed ​“in light of pos­si­ble bar­ri­ers to effec­tive com­pe­ti­tion in var­i­ous mar­kets con­nected with the olive oil sec­tor, specif­i­cally with the extra-vir­gin olive oil sec­tor.”

In what could pro­duce inter­est­ing insights into the Spanish olive oil sec­tor, the CNC is call­ing for sub­mis­sions from those poten­tially affected by the merger as it pre­pares to probe the state of com­pe­ti­tion in the national mar­ket.

In a doc­u­ment in Spanish referred to as a short note, the CNC said that after its ini­tial analy­sis it had con­cluded that the deal was ​“likely to have effects on com­pe­ti­tion in var­i­ous mar­kets related to vir­gin olive oil and extra vir­gin through­out the Spanish mar­ket.”

It would strengthen the lead­er­ship of Deoleo — which sells olive oil in Spain mainly under the Carbonell and Koipe brands and in inter­na­tional mar­kets as Bertolli, Carapelli and Sasso — in the mar­ket for branded vir­gin and extra vir­gin olive oil by giv­ing it an over­all mar­ket share vastly supe­rior to its near­est com­peti­tor.

The acqui­si­tion of the Hojiblanca brand would also elim­i­nate one of Deoleo’s (for­merly SOS) sources of com­pe­ti­tion.

And despite the mar­ket clout of Spain’s super­mar­ket chains, Deoleo could gain an influ­ence over these because its range of prod­ucts could be con­sid­ered ​“must haves” on super­mar­ket shelves, the CNC said.

There is also the risk that, given the ten­dency of the big super­mar­kets to limit stocks of branded prod­ucts, the deal could see the dis­ap­pear­ance of smaller com­peti­tors.

The CNC said other pos­si­ble effects of increased links between Deoleo and Hojiblanca — the world’s biggest bulk extra vir­gin olive oil pro­ducer and the umbrella for 95 olive oil coop­er­a­tives — could include clos­ing or com­pli­cat­ing access by other oper­a­tors to the bulk sec­tor.

Also, the pres­ence of Hojiblanca on the Deoleo board could lead to the exchange of sen­si­tive infor­ma­tion between the two rivals that facil­i­tates the coor­di­na­tion of their activ­i­ties and thus reduces rec­i­p­ro­cal com­pet­i­tive pres­sure.

There is also a risk of weaker com­pe­ti­tion between branded and white label prod­ucts, also known as store brands, which account for the vast major­ity of olive oil retail sales in Spain.

Lastly, the deal could fos­ter coor­di­nated action for the pos­si­ble align­ment of Deoleo with the big super­mar­ket chains.

For these rea­sons the CNC said it had decided to move to the sec­ond phase of its merger con­trol process, dur­ing which will seek sub­mis­sions over the next ten days includ­ing on prod­uct and geo­graph­i­cal demar­ca­tion in the mar­ket, the level of cur­rent and poten­tial com­pe­ti­tion from other oper­a­tors within or beyond Spain, the poten­tial impact of the pro­posed merger on this com­pe­ti­tion, and the exis­tence of any bar­ri­ers to mar­ket access.

When they announced their agree­ment on October 18, Deoleo said the asset trans­fer would enhance the range and qual­ity of its lead­ing brands, while Hojiblanca said it would strengthen the global dom­i­nance of Spanish olive oil.


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