Completed acquisition by Dr Schär of the gluten free food product business of Royal Numico

Affected market: Gluten-free foods

No. ME/2841/07

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 views, assessment and decision.

The OFT’s decision on reference under section 22(1) given on 27 March 2007. Full text of decision published 4 April 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 and third parties for reasons of commercial confidentiality.

PARTIES

Dr Schär Srl (Dr Schär) is a company based in Italy that manufactures and distributes gluten-free food products. In the UK, it sells its products under the 'Dr Schär' and 'Dietary Specials' brands through its part-owned subsidiary Nutrition Point Limited (Nutrition Point). It also produces gluten-free products under the 'Glutano' brand, which are distributed in the UK and Ireland by Gluten Free Foods, an independent company.

Royal Numico NV (Numico) is a nutrition company active in the baby food and clinical nutrition segments. In the gluten-free food products sector, it is active through two subsidiaries, UK Nutricia Clinical Care, which distributes products under the brands 'Trufree' and 'Glutafin', and SHS International, which distributes products under the brand 'Juvela'. The UK turnover associated with the Trufree and Glutafin business is approximately £[ ] million.

TRANSACTION

The transaction was completed on 20 December 2006. It involved the acquisition by Dr Schär of assets related to Numico's gluten-free foods business traded under the brands Glutafin and Trufree (the Glutafin and Trufree business). The acquired assets include intellectual property rights, inventory, contracts, employees, customer information and goodwill, but not manufacturing assets. [ ]

[ ].

The OFT's statutory deadline for deciding whether to refer the merger to the Competition Commission is 4 May 2007 and the administrative deadline is 5 April 2007.

JURISDICTION

As a result of this transaction Dr Schär and the Glutafin and Trufree business have ceased to be distinct. The parties overlap in the supply of gluten-free foods, where their combined share of supply in the UK is around [30-40] per cent, and consequently 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 a relevant merger situation has been created.

THIRD PARTY VIEWS

Initially a number of third parties expressed concerns about the transaction, but these seemed to be based on a misunderstanding that Numico was divesting all of its gluten-free food products business, which would have resulted in Dr Schär supplying [85-95] per cent of the prescription sector. Once it was clarified that Numico is maintaining the Juvela business, third parties were unconcerned.

ASSESSMENT

The parties overlap in the supply of gluten-free food products through retailers and by prescription.

In the retail sector, Dr Schär will be the supplier of the most popular branded gluten-free food products and is increasing its share of supply by around [5-15] per cent to a resulting share of around [30-40] per cent. However, evidence before the OFT suggests that there is sufficient competition from alternative brands by smaller suppliers and from own-label products. Indeed, some retailers have larger sales of own-label than of Dr Schär's and Numico's products.

In the prescription sector, the effect of the transaction is to separate the two leading brands, Juvela and Glutafin. Numico reduced its share of supply from [80-90] to [35-45] per cent and the market is less concentrated as a result.

Consequently, the OFT does not believe that it is or may be the case that the merger has resulted or 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 22(1) of the Act.

Back to top