Anticipated acquisition by G Costa (Holdings) Ltd, a subsidiary of Associated British Foods plc of Worldwing Investments Ltd, the holding company for the Patak Group

Affected market: Grocery products

No. ME/3076/07

Please note that the full text of the decision can be downloaded by using the link on the right. What follows are extracts regarding the parties, the transaction, jurisdiction, third party comments, assessment and decision.

The OFT's decision on reference under section 33(1) given on 6 August 2007. Full text of decision published 10 August 2007.

Please note that square brackets indicate text or figures which have been deleted or replaced with a range at the request of the parties for reasons of commercial confidentiality.

PARTIES

G Costa (Holdings) Ltd (Costa) is a wholly owned subsidiary of Associated British Foods plc (ABF), an international food, ingredients and retail group. Costa sells a variety of cooking ingredients through its 'Blue Dragon' range. ABF also owns ABF Grain Products Ltd, which through its division, Westmill Foods (Westmill), supplies flour, rice, noodles and other ethnic food products to retail and non-retail customers in the UK and Europe.

Worldwing Investments Ltd (Worldwing) is the holding company for the Patak Group (Patak) of companies. Patak manufactures markets and distributes Indian ambient temperature wet cooking sauces, curry pastes, chutneys, pickles, Indian ready meals, snacks and bread in the UK. Its UK turnover for 2006 was approximately £[ ].

TRANSACTION

Costa is proposing to acquire Patak via the acquisition of the entire issued share capital of Worldwing. The parties notified the transaction on 11 June 2007. The administrative deadline is 6 August 2007.

JURISDICTION

As a result of this transaction Costa and Worldwing will cease to be distinct. The parties overlap in the supply of Indian ambient temperature wet cooking sauces and have combined shares of supply in the UK in excess of 25 per cent, so the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation.

THIRD PARTY VIEWS

The majority of third parties were not concerned by this transaction. The only concern raised, regarding strength of the merged entity with the Patak and Rajah brands in the ethnic wholesale sector, has been addressed above.

ASSESSMENT

The parties overlap in the supply of Indian ambient temperature wet cooking sauces; Indian cooking ingredients such as curry paste; Indian condiments such as chutneys and pickles; pappadums; rice; and naan bread.

In relation to the supply of pappadums; rice; and naan bread, the overlaps are small and there are a number of other competitors present. With regards the supply of Indian ambient temperature wet cooking sauces, there will continue to be a number of UK suppliers, including Premier the largest supplier, that will continue to act as a competitive constraint on the parties' behaviour post-merger. Furthermore, customers were not concerned.

For the supply of Indian cooking ingredients, although the merger involves the largest supplier of this product, the transaction results in a very small increment to the merged entity's shares of supply. In addition, customers stated that they do have alternative suppliers and that they did not have any concerns. These factors suggest that the merger does not give rise to competitive concerns in respect of the supply of Indian cooking ingredients.

For the supply of Indian condiments to the non-retail sector, the constraint imposed by the remaining competitors combined with the potential for new entry and expansion by competitors and customers are considered by the OFT to pose a sufficient constraint on the parties' behaviour post-merger.

Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

DECISION

This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.

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