French Competition Authority clears takeover by Orlait

The French Competition Authority (FCA) has cleared the takeover by Orlait, a subsidiary of Sodiaal, of the ultra-high temperature (“UHT”) treated milk activity of Terra Lacta through a transfer of shares and an exclusive distribution agreement. Orlait, which is a milk trader, will control the marketing and distribution of Terra Lacta UHT treated milk. The FCA evaluated the potential impact of the transaction on the price of UHT treated milk sold in supermarkets and concluded that it did not raise competition concerns despite high market shares. This conclusion followed a detailed economic analysis of the potential unilateral effects of the transaction, which included the use of upward pricing pressure tests to show that, although the transaction would lead to an increase in concentration and high market shares, it would not create competition concerns. The FCA considered that a significant price increase was unlikely and that competitors had in any case the ability to increase their production. Evidence of strong buyer power from supermarkets was also a factor retained by the FCA in its decision.
A CRA team led by Laurent Flochel and including Alexandre Carbonnel advised Orlait throughout the proceedings.