`Deoleo and Hojiblanca Cleared to Form Global Olive Oil Giant - Olive Oil Times

Deoleo and Hojiblanca Cleared to Form Global Olive Oil Giant

Mar. 31, 2013
Julie Butler

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A new giant is set to enter the world olive oil arena now that the Deoleo-Hojiblanca merger has a green light from Spain’s com­pe­ti­tion watch­dog.

The best news for the Andalusian econ­omy in a long time,” is how one Spanish jour­nal­ist sum­ma­rized approval for the deal between Deoleo, global leader in sales of bot­tled olive oil, and Hojiblanca, the biggest pro­ducer of extra vir­gin olive oil.

The National Competition Commission (CNC) announced this week it had approved the pro­posal after Deoleo (for­merly SOS) made under­tak­ings — such as not to share cer­tain mar­ket-sen­si­tive infor­ma­tion — allay­ing its con­cerns about the deal’s anti-com­pet­i­tive impact.

Hojiblanca to join Bertolli, Carapelli and Carbonell in Deoleo sta­ble

Deoleo, which already con­trols three of the world’s top four olive oil labels — Bertolli, Carapelli and Carbonell — will thus be allowed to also acquire the Hojiblanca extra vir­gin olive oil brand. And the huge Hojiblanca Cooperative Group — the umbrella for 95 coop­er­a­tives — will increase its stake in Deoleo to 10.3 per­cent and occupy two of 17 seats on its board.

Spanish news site El Diario said the merger would cre­ate a con­glom­er­ate with dom­i­nant posi­tions in the entire process, from pro­duc­tion to pack­ag­ing and retail.”

That 55,000, mostly Andalusian, olive oil farm­ers, with more than 325,000ha and nearly 100 mills, grouped together in the Hojiblanca coop­er­a­tive group and with a turnover of €544 mil­lion in 2012, will gain con­trol in the Deoleo group, the world’s lead­ing bot­tler, with 22 per­cent of the global mar­ket, and nearly €1 bil­lion in turnover, is extra­or­di­nary,” it wrote.

Competition watchdog’s fears

In a press release, the CNC said its thor­ough inves­ti­ga­tion had sparked con­cerns the merger could have anti-com­pet­i­tive effects.

These included the pos­si­ble exclu­sion of Deoleo’s down­stream com­peti­tors, such as those who are cur­rently sup­plied by Hojiblanca in its capac­ity as a source of bulk olive oil, as well as upstream ones, such as com­pa­nies other than Hojiblanca that have until now been sup­pli­ers for Deoleo.

There was also a risk of coor­di­na­tion of activ­i­ties between Deoleo and Hojiblanca, partly aris­ing from Hojiblanca’s pres­ence on the Deoleo board and the con­se­quent risk of com­mer­cially sen­si­tive infor­ma­tion being shared between ver­ti­cally-related com­peti­tors.

Deal approved after four key com­mit­ments made

But the CNC con­sid­ered that these issues would be ade­quately addressed under com­mit­ments pro­posed by Deoleo on March 15.

The first is designed to avoid any de-facto limit on Hojiblanca’s com­pe­ti­tion in the branded (as opposed to store brand) olive oil mar­ket. It requires the removal of a clause in the agree­ment between the com­pa­nies that would have seen Hojiblanca lose its right to two seats on Deoleo’s board if, after a three-year agree­ment not to com­pete, it held more than a 2 per­cent share of this mar­ket in Spain.

The sec­ond requires that Hojiblanca’s two rep­re­sen­ta­tives on Deoleo’s board of direc­tors have no access to com­mer­cially sen­si­tive infor­ma­tion on Deoleo’s sales of pack­aged olive oil to third par­ties, or on Deoleo’s pur­chase of bulk olive oil, and abstain from votes relat­ing to such mat­ters. Similarly, no-one from Deoleo’s board can solicit com­mer­cially sen­si­tive infor­ma­tion from Hojiblanca on its bulk sales to other par­ties.

The third com­mit­ment pro­vides that after three years have passed, the CNC will assess whether there has been any rel­e­vant change in the struc­ture or reg­u­la­tion of the mar­kets that jus­ti­fies con­tin­u­ing or adapt­ing the con­di­tions for two more years.

The fourth relates to mon­i­tor­ing com­pli­ance with the com­mit­ments and includes the sign­ing of a con­fi­den­tial­ity agree­ment by the sec­re­tary to Deoleo’s board and sub­mis­sion of cer­tain infor­ma­tion to the CNC.

Deoleo says the deal will enhance the range and qual­ity of its lead­ing brands, while Hojiblanca says it will strengthen the global dom­i­nance of Spanish olive oil.

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