CELEX: 32019M9413
Language: en
Date: 2019-12-09 00:00:00
Title: Commission Decision of 09/12/2019 declaring a concentration to be compatible with the common market (Case No COMP/M.9413 - LACTALIS / NUOVA CASTELLI) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                 Brussels, 9.12.2019
                                                                 C(2019) 8979 final
                                                                                  PUBLIC VERSION
                                                                  In the published version of this decision,
                                                                  some information has been omitted
                                                                  pursuant to Article 17(2) of Council
                                                                  Regulation (EC) No 139/2004 concerning
                                                                  non-disclosure of business secrets and other
                                                                  confidential information. The omissions are
                                                                  shown thus […]. Where possible the
                                                                  information omitted has been replaced by
                                                                  ranges of figures or a general description.
                                                                 To the notifying party
Subject:             Case M.9413 – LACTALIS / NUOVA CASTELLI
                     Commission decision pursuant to Article 6(1)(b) of Council Regulation
                     No 139/20041 and Article 57 of the Agreement on the European Economic
                     Area2
Dear Sir/Madam,
(1)         On 4 November 2019 the Commission received a notification of a proposed
            concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (the
            'Merger Regulation') by which Gruppo Lactalis Italia S.r.l. (Italy), belonging to the
            Groupe Lactalis S.A. (together ‘Lactalis’, France) acquires within the meaning of
            Article 3(1)(b) of the Merger Regulation of the whole of Nuova Castelli S.p.A.
            (‘Nuova Castelli’ or the ‘Target’, Italy), a wholly-owned subsidiary of Nuova
            Castelli Group S.p.A (‘NC Group’, France), in turn controlled by Charterhouse
            Capital Partners (‘Charterhouse’, United Kingdom) by way of purchase of shares
            (Lactalis and Nuova Castelli are designated hereinafter together as the ‘Parties’).3
1         OJ L 24, 29.1.2004 p. 1. With effect from 1 December 2009, the Treaty on the Functioning of the
          European Union (‘TFEU’) has introduced certain changes, such as the replacement of ‘Community’
          by ‘Union’ and ‘common market’ by ‘internal market’. The terminology of the TFEU will be used
          throughout this decision.
2         OJ L 1, 3.1.1994, p. 3 (the ‘EEA Agreement’).
3         Publication in the Official Journal of the European Union No C 385, 13.11.2019, p. 9.
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak--- 1.   THE PARTIES
(2)    Lactalis produces and supplies cheese such as mozzarella, mascarpone and ricotta,
       as well as drinking milk, butter, cream and industrial dairy products (milk powder,
       whey, etc.). Lactalis focuses on branded products, although it also achieves sales in
       relation to products sold under retailers’ private labels.
(3)    Nuova Castelli is a wholly-owned subsidiary of the NC Group, […]. NC produces
       and sells various Italian cheeses, mostly hard cheeses and soft cheeses (mozzarella,
       Parmigiano Reggiano, Grana Padano, Pecorino, ricotta, etc.) and has trading
       activities in relation essentially to mascarpone, Feta and butter. Nuova Castelli
       specialises in the supply of cheeses to retailers to be resold under private labels.
2.   THE OPERATION
(4)    The industrial and commercial activities of the NC Group are contained within the
       Target. Nuova Castelli is currently undergoing a legal reorganisation; however, this
       does not affect the structure of its ownership. Additionally, prior to the closing of
       the acquisition, Nuova Castelli will have acquired sole control over ILC La
       Mediterranea S.p.A. (‘Mandara’). These activities have been taken into account as
       part of the perimeter of the present Transaction for the purposes of its competitive
       assessment.
(5)    Pursuant to a Sale and Purchase Agreement (‘SPA’) signed on 29.5.2019, Lactalis
       will acquire all issued and outstanding shares of Nuova Castelli representing 100%
       of the share capital of the Target. Nuova Castelli will therefore be solely controlled
       by Lactalis (the ‘Transaction’).
(6)    The proposed Transaction therefore constitutes a concentration within the meaning
       of Article 3(1)(b) of the Merger Regulation.4
3.   EU DIMENSION
(7)    The undertakings concerned have a combined aggregate world-wide turnover of
       more than EUR 5 000 million5 (Lactalis: […]; Nuova Castelli: […]). Each of them
       has an EU-wide turnover in excess of EUR 250 million (Lactalis: […]; Nuova
       Castelli: […]), but each does not achieve more than two-thirds of its aggregate EU-
       wide turnover within one and the same Member State. The notified operation
       therefore has an EU dimension.
4.   MARKET DEFINITION
4.1. Introduction
(8)    Both Parties are active in the production and supply of dairy products. Their
       activities overlap and give rise to affected markets in (i) the procurement of milk;
       (ii) the production and sale of cheese (notably the Italian-type cheese and Feta) to
4    The same concentration was already notified to the Commission on 9.9.2019, but the notification was
     subsequently withdrawn on 10.10.2019.
5    Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission
     Consolidated Jurisdictional Notice (OJ C95, 16.4.2008, p. 1).
                                                      2
 ---pagebreak---          retailers6 ; (iii) the production and sale of other dairy products (dairy-based desserts)
         and (iv) the production and sale of butter.7
4.2.   Procurement of milk
(9)      Raw milk refers to milk which has not undergone any treatment (other than
         cooling) and has a perishable nature. It is produced by dairy farmers, who normally
         milk cows twice a day. Raw milk is subsequently stored in milk storage cool tanks
         at the farm which reduces its temperature to 4° C. Raw milk may be kept on the
         dairy farm for one or two days. It is then delivered to (or collected by) dairy
         companies like the Parties, where it is pasteurised. Once pasteurised, milk can be
         freely traded and transported over long distances.
4.2.1. Commission’s precedents
(10)     In previous decisions, the Commission considered that the procurement of milk
         should be divided between conventional milk and organic milk.8 The Commission
         left the product market definition open in relation to Germany9 and Spain10 , and
         assessed both segments together as a single market in relation to Italy.11
(11)     The Commission also considered a further segmentation of milk procurement by
         species (cow, goat and sheep) because of the limited substitutability of the
         downstream end products, but eventually left the product market definition open.12
4.2.2. Notifying Party’s view
(12)     According to the Notifying Party, Lactalis procures almost exclusively
         conventional milk in Italy13 and that Nuova Castelli has just started collecting
         limited volumes of organic milk.14
(13)     The Notifying Party submits that segmenting milk procurement based on
         conventional or non-organic milk or by species is not relevant,15 given that the
         Parties’ activities only overlap in the market for the procurement of conventional
         cow milk.
6      The Parties’ activities also overlap in the supply of Italian-type cheese and related products to the
       industrial customers/out-of-home (‘OOH’) retail channel; however, based on the information
       submitted by the Parties, these overlaps would not lead to affected markets (see Form CO,
       Section 6-2.5) and thus are not further discussed in this Decision.
7      The activities of the Parties overlap in other areas; however, according to the data submitted by the
       Parties, these horizontal overlaps do not give rise to affected markets, and thus are not further
       discussed in this Decision.
8      Commission Decision in Case M.7434 – Müller UK & Ireland/Dairy Crest Dairy Operations,
       recital 10; Commission Decision in Case M.6627 – Arla Foods/Milch-Union Hocheifel, recital 17;
       Commission Decision in Case M.6611 – Arla Foods/ Milk Links, recital 10; Commission Decision in
       Case M.6441 – Senoble/Agrial/Senagral JV, recital 17.
9      Commission Decision in Case M.6348 – Arla Foods/Allgäuland, recitals 13; Commission Decision in
       Case M.6119 – Arla/Hansa, recital 11.
10     Commission Decision in Case M.5875 – Lactalis/Puleva, recital 17.
11     Commission Decision in Case M.6242 – Lactalis/Parmalat, recital 13.
12     Commission Decision in Case M.8549 – Lactalis/Omira, recital 11; Commission Decision in Case
       M.7573 – DMK/DOC KAAS, recital 15; Commission Decision in Case M.6441 –
       Senoble/Agrial/Senagral JV, recital 16.
13     […].
14     […].
15     Form CO, paragraphs 120 and 121.
                                                          3
 ---pagebreak--- (14)      The Notifying Party submits that the product market definition may be left open as
          it has no bearing on the assessment of the Transaction.16
4.2.3. Commission’s assessment
(15)      As the Transaction does not raise serious doubts as to its compatibility with the
          internal market with respect to the market for procurement of milk under any
          plausible product market definition, the question whether the market for the
          procurement of milk should be further segmented can be left open.
4.3.    Supply of Italian-type cheese and Feta
4.3.1. Distinction of Italian-type cheese and Feta by category
(16)      The Notifying Party refers to mozzarella, mascarpone and ricotta as Italian fresh
          cheese; to Gorgonzola as an Italian soft cheese; and Parmigiano Reggiano, Gran
          Castelli, Grana Padano, Pecorino and Pecorino Romano as Italian-type hard
          cheeses.17 Feta is a fresh Greek cheese made from ewe’s and goat’s milk.18
(17)      The Parties manufacture and trade several cheeses that carry a protected
          designation of origin label (‘PDO’). Nuova Castelli manufactures and sells:
          Mozzarella di Bufala Campana, Gorgonzola, Parmigiano Reggiano, and Grana
          Padano. Nuova Castelli also trades PDO Feta. Lactalis manufactures PDO
          Gorgonzola and PDO Feta, and it trades Mozzarella di Bufala Campana,
          Parmigiano Reggiano, and Grana Padano.
4.3.1.1. Commission’s precedents
(18)      The Commission has previously distinguished between different categories of
          cheeses such as “fresh cheese”, “soft cheese”, “semi-hard cheese”, and “hard-
          cheese” among others.19
(19)      According to Commission’s precedents, each cheese category could                         be further
          segmented by type of cheese due to consumers’ preferences20 or                          the unique
          characteristics of product.21 In this regard, the Commission assessed                  in previous
          decisions whether an Italian-type cheese, mozzarella, might constitute                  a separate
          market. The precise market definition was ultimately left open.22
16      Form CO, paragraph 121.
17      Form CO, paragraph 342.
18      Form CO, paragraph 288; Commission Decision in Case M.4135 – Lactalis/Galbani, fotenote 8.
19      Commission Decision in Case M.6722 – Friesland Campina/Zijerveld & Veldhuyzen and den
        Hollander, recital 20; Commission Decision in Case M.6611 – Arla foods/Milk link, recitals 36;
        Commission Decision in Case M.6242 – Lactalis/Parmalat, recitals 51-53.
20      Commission Decision in Case M.4135 – Lactalis/Galbani, recital 12; Commission Decision in Case
        M.7573 – DMK/Doc Kaas, recital 24; Commission Decision in Case M.6611 – Arla foods/Milk link,
        recital 36; Commission Decision in Case M.4761 – Bongrain/Sodiaal/JV, recital 23, Commission
        Decision in Case M.6242 – Lactalis/Parmalat, recitals 52-53. In previous cases, the Commission also
        assessed and left open whether cheese categories could be further segmented by type of presentation
        (such as sliced cheese, cheese sold at variable and fixed weight) (see for example Commission
        Decision in Case M.6611 – Arla foods/Milk link, recital 36). The sales of the Parties include variable
        and fixed weight sales. In this Decision, a segmentation by type of presentation is unlikely to
        substantially change the assessment of the Transaction given that the majority of the sales of Parties
        are in fixed weight. Therefore, it will not be addressed further in this decision.
21      Commission Decision in Case M.4135 – Lactalis/Galbani, recitals 12 and 13.
22      Commission Decision in Case M.4135 – Lactalis/Galbani, recital 12; Commission Decision in
        M.7573 – DMK/Doc Kaas, recital 24; Commission Decision in M.6611 – Arla foods/Milk link,
                                                            4
 ---pagebreak--- (20)      In Lactalis/Galbani, the Commission also considered whether each type of cheese
          could be further sub-segmented by the type of milk used for its production. In
          particular, the Commission analysed whether cow milk mozzarella and buffalo
          milk mozzarella might belong to separate product markets, notably due to
          differences in taste and price. The precise market definition was ultimately left
          open.23
(21)      Additionally, in a previous case, the Commission considered further sub-
          segmentations of blue cheese by specialties; however, it ultimately left the precise
          market definition for blue cheese open.24
(22)      In previous cases, the Commission has considered whether segmentation by
          products protected by designation of origin could be warranted. The Commission
          noted such segmentation could be justified given that consumers may attach value
          to the designation of origin, while producers are constrained by specific rules
          (e.g. origin, ingredients, manufacturing process, etc.). However, the precise market
          definition was left open.25
4.3.1.2. Notifying Party’s view
(23)      The Notifying Party argues that the relevant market could be segmented by cheese
          category, i.e. hard-cheese, fresh cheese, soft cheese; however, it submits that further
          segmentation by type of cheese does not appear relevant for the supply to retailers
          of Italian-type branded and private label cheese products.26
(24)      As regards the supply of branded products to retailers, the Notifying Party argues
          that a segmentation based on the type of cheese does not always reflect consumer
          habits; in particular with regard to Italian-type hard cheeses.27 The Notifying Party
          claims that, from a demand-side perspective based on consumers’ consumption
          habits across different European countries except most likely Italy, Italian-type
          hard cheeses, such as Grana Padano, Parmigiano Reggiano and Pecorino, are
          substitutable because all cheese types can be used for the same consumption
          occasion, i.e. in pasta dishes.28 The Notifying Party also explained that suppliers of
          Italian-type hard cheeses, such as Parmigiano Reggiano and Grana Padano with the
          PDO label, produce also their equivalents without the label.29
(25)      With regard to the supply of private label Italian-type cheese to retailers, the
          Notifying Party submits that the segmentation by type of cheese does not appear
          relevant.30 First, the Notifying Party argues that in the supply of private label
          Italian-type cheese the relevant factor is the capabilities of suppliers to respond to
          requirements of the tenders and not consumer preferences.31 According to the
          Notifying Party, various types of cheese can be easily manufactured by the same
        recital 36; M.4761 – Bongrain/Sodiaal/JV, recital 23, Commission Decision in M.6242 –
        Lactalis/Parmalat, recitals 52-53.
23      Commission Decision in Case M.4135 – Lactalis/Galbani, recital 13.
24      Commission Decision in M.6611 – Arla foods/Milk link, recitals 39-40.
25      Commission Decision in Case M.4135 – Lactalis/Galbani, recitals 14 and 15.
26      Form CO, paragraphs 207 and 258.
27      Form CO, paragraph 258.
28      Form CO, paragraph 258.
29      Form CO, paragraph 300.
30      Form CO, paragraph 207.
31      Form CO, paragraph 188 et seq.
                                                     5
 ---pagebreak---           producers and they could belong to the same market.32 Second, the Notifying Party
          also submits that some fresh cheese types are sold together to retailers under one
          contract and the same price (for example, ricotta and mascarpone).33
(26)      As regards the segmentation of cheese based on the type of milk used to produce
          that cheese, the Notifying Party submits that, from the point of view of consumers,
          buffalo milk mozzarella and cow milk mozzarella are substitutable because both
          products satisfy the same need and there is a correlation between their prices.34
(27)      Concerning geographical indications, the Notifying Party explains that the labelling
          of PDO products is subject to stringent rules and requires that the product
          originates in a specific region and that the ingredients originate and the production
          takes place in the defined geographic area. Accordingly, only producers located in
          the specific regions are able to produce PDO cheese.
(28)      The manufacturers of Italian-type PDO cheeses are organized in consortia. These
          consortia require their members to manufacture PDO cheeses from Italian milk
          produced in specific Italian regions. For example, for Parmigiano Reggiano the
          milk must come from the provinces of Bologna to the left of Reno river, Mantua to
          the right of the Po river, Modena, Parma and Reggio nell’Emilia.35
(29)      However, the Notifying Party argues that segmenting the market based
          geographical indications such as PDO does not reflect the nature of competition on
          the market.36
(30)      The Notifying Party also submits that private label products are substitutable
          irrespective of the place of where they are manufactured and the origin of milk
          used.37 The Notifying Party explains that mentioning the country of origin of the
          product is voluntary and submits that retailers procure mozzarella, mascarpone and
          ricotta without giving consideration to the country of origin.38 As regards the origin
          of milk, some products carry the indication that milk is of “EU origin”. […].39
4.3.1.3. Commission’s assessment
(31)      The market investigation confirmed the previous segmentation of supply of cheese
          by categories. The majority of responsive customers indicated that the different
          Italian-type cheese categories (e.g. fresh cheese, soft cheese, semi-hard cheese and
          hard cheese) were not substitutable among each other.40
(32)      Moreover, the results of the market investigation also point to a further
          segmentation between types of cheese within these categories for most of the
          concerned products (Italian-type cheeses and Feta).
32      Form CO, paragraph 205.
33      Form CO, paragraph 206.
34      Form CO, paragaraph 261 et seq.
35      Form CO, paragraph 244.
36      Form CO, paragraph 271. The Notifying Party submits that the Parties “do not manufacture and
        supply cheeses with the same PDO. Nuova Castelli supplies (as branded products) Mozzarella di
        Bufala Campana, under the Mandara brand, Parmigiano Reggiano, Grana Padano, Gorgonzola,
        Taleggio and Pecorino under the Nuova Castelli brand, none of which Lactalis manufactures or
        supplies as PDO products.” As regards Gorgonzola, Lactalis sells only very small quantities.
37      Form CO, paragraph 241 et seq.
38      Form CO, pages 77 and 78.
39      Form CO, pages 78 and 79.
40      Questionnaire to customers (Q2), question 9.
                                                      6
 ---pagebreak---      (A)        Mozzarella
(33)   The vast majority of customers responding to the market investigation considered
       that mozzarella is not substitutable with any other type of cheese.41 Customer
       explained that “[m]ozzarella is too specific and creates a specific market”42 and
       that “[i]t is very hard to find the same taste and texture in another product”.43
       Cow and buffalo milk mozzarella
(34)   The results of the market investigation also indicate that, contrary to what the
       Notifying Party argues, cow and buffalo milk mozzarella are not substitutable.
(35)   First, the large majority of customers and competitors that responded to the market
       investigation indicated that cow milk and buffalo milk mozzarella are not
       substitutable at all or only partially substitutable in terms of price and product
       characteristics.44 As a customer explained: “The quality of the product is superior
       in buffalo milk. The taste is more pronounced. The price is higher. Many
       consumers of mozzarella di bufala do not buy mozzarella made of cow milk
       because they find the product tasteless and unattractive”45
(36)   Second, the majority of customers and competitors that responded to the market
       investigation indicated that buffalo milk mozzarella commands a significant price
       premium (over 30% higher than cow milk mozzarella).46
(37)   Third, the large majority of customers expressing their views submitted that even if
       the price of buffalo milk mozzarella increased by 5-10% they would not switch to
       cow milk mozzarella.47 The majority of responsive competitors agreed.48
(38)   Fourth, from a supply-side perspective and according to the market investigation,
       there is no substitutability between buffalo milk mozzarella and cow milk
       mozzarella.49
       PDO and country of origin
(39)   First, with regard to buffalo milk mozzarella carrying a PDO label, i.e. Mozzarella
       di Buffala di Campana, certain customers responsive to the market investigation
       indicated that PDO carries a certain premium value as it assures quality.50
       However, the large majority of the customers that responded to the market
       investigation indicated that PDO and non-PDO mozzarella were alternatives in
       terms of price and product characteristics.51
41   Questionnaire to customers (Q2), question 12.
42   Questionnaire to customers (Q2), question 12.1.
43   Questionnaire to customers (Q2), question 12.1.
44   Questionnaire to customers (Q2), question 15; Questionnaire to competitors (Q1), question 19.
45   Courtesy translation from French: “La qualité du produit est supérieure en lait de bufflonne. Le gout
     est plus prononcé. Le prix est supérieur. Beaucoup de consommateurs de mozzarella di bufala
     n'achète pas de mozzarella au lait de vache car trouve le produit insipide et sans intérêt”,
     Questionnaire to customers (Q2), question 15.1.
46   Questionnaire to customers (Q2), question 17; Questionnaire to competitors (Q1), question 22.
47   Questionnaire to customers (Q2), question 16.
48   Questionnaire to competitors (Q1), questions 20 and 21.
49   Questionnaire to competitors (Q1), question 19; Questionnaire to customers (Q2), question 15.
50   Questionnaire to customers (Q2), question 37.1: “DOP is a sort of quality insurance which customers
     pay attention to”, “Par exemple, l'origine de la matière première du Lait de vache (Italie) est un
     critère important pour le client.”
51   Questionnaire to customers (Q2), question 37.
                                                      7
 ---pagebreak--- (40)   Moreover, the majority of responsive customers indicated that if prices of PDO
       mozzarella increased by 5-10% end-consumers will switch to non-PDO
       mozzarella.52 The responses from competitors were evenly split.53
(41)   Second, with regard to the country of origin of non-PDO Italian-type cheese
       products (including country of origin of the milk), the market investigation points
       at the fact that this is a factor of differentiation recognised by end-consumers
       particularly in certain countries (e.g. Italy); however, the majority of respondents
       indicated that retailers do not impose any specifications as regard the origin of the
       milk of non-PDO Italian-type cheeses.54
(42)   Third, customers that responded to the market investigation were evenly split
       between those that considered that mozzarella labelled “made in Italy” was fully or
       largely substitutable by and mozzarella not labelled as made in Italy and those that
       considered these products not or only partially substitutable.55
       Conclusion
(43)   In light of the results of the market investigation and for the purpose of this
       decision, the Commission considers that mozzarella constitutes a distinct product
       market from other Italian-type fresh cheeses and that it can be further segmented by
       type of milk species into buffalo milk mozzarella and cow milk mozzarella.
     (B)       Ricotta
(44)   Ricotta and mascarpone are different types of fresh cheese that tend to be used as
       cooking ingredients.56 The market investigation confirmed that they belong to
       separate markets.
(45)   First, the results of the market investigation indicate that the large majority of
       customers consider that there are significant differences between ricotta and
       mascarpone in terms of consumption occasions and prices.57
(46)   Second, the vast majority of customers indicated           that ricotta is not substitutable at
       all or only partially substitutable with other type        of cheeses in terms of price and
       product characteristics.58 Moreover, the majority          of competitors that responded to
       the market investigation indicated that customers          do not switch to other products
       when prices of ricotta increase.59
(47)   Third, from a supply-side perspective, ricotta is made from whey, a left over from
       the production of cheese (e.g. mozzarella and mascarpone) and mascarpone is
       produced from milk fat.60 The majority of competitors that responded to the market
       investigation replied that producers of mozzarella could not start producing ricotta
       without incurring in significant costs and in a short period of time.61
52   Questionnaire to customers (Q2), question 38.
53   Questionnaire to competitors (Q1), question 33.
54   Questionnaire to customers (Q2), question 11; Questionnaire to competitors (Q1), question 35.
55   Questionnaire to customers (Q2), question 13.
56   Questionnaire to customers (Q2), question 21.1.
57   Questionnaire to customers (Q2), question 21.
58   Questionnaire to customers (Q2), question 18.
59   Questionnaire to competitors (Q1), question 23.
60   Form CO, paragraphs 1054 et seq.; Questionnaire to customers (Q2), questions 22.1
61   Questionnaire to competitors (Q1), question 25.
                                                     8
 ---pagebreak--- (48)  Moreover, the majority of the respondents to the market investigation indicated that
      suppliers active in ricotta could not start producing and selling mascarpone without
      incurring in significant costs and swiftly.62
(49)  Fifth, with regard to the country of origin of non-PDO Italian-type cheese products
      (including country of origin of the milk), as indicated in paragraph (41) above, the
      majority of responsive customers do not impose any specifications as regard the
      origin of the milk of non-PDO Italian-type cheese products, including ricotta.63
      Conclusion
(50)  In light of the results of the market investigation and for the purpose of this
      decision, the Commission considers that ricotta constitutes a separate product
      market from other Italian-type fresh cheeses.
     (C)       Mascarpone
(51)  As explained in Section (B) above, the market investigation confirmed that
      mascarpone and ricotta belong to separate markets.
(52)  First, the results of the market investigation indicate that the large majority of
      customers consider that there are significant differences between mascarpone and
      ricotta in terms of consumption occasions and prices.64
(53)  Second, the vast majority of customers indicated that mascarpone is not
      substitutable at all or only partially by other type of cheeses in terms of price and
      product characteristics.65 Moreover, the majority of the customers and competitors
      that responded to the market investigation indicated that customers do not switch to
      other cheeses when prices of mascarpone increase.66
(54)  Third, from a supply-side perspective, mascarpone is produced from milk fat and
      ricotta is made from whey, a left over from the production of cheese
      (e.g. mozzarella and mascarpone).67 The majority of competitors that responded to
      the market investigation replied that producers of mozzarella could not start
      producing mascarpone without incurring in significant costs and in a short period
      of time.68
(55)  Moreover, the majority of the respondents to the market investigation indicated that
      suppliers active in mascarpone could not start producing and selling ricotta without
      incurring in significant costs and swiftly.69
(56)  Fourth, with regard to the country of origin of non-PDO Italian-type cheese
      products (including country of origin of the milk), as indicated in paragraph (41)
      above, the majority of responsive customers do not impose any specifications as
62   Questionnaire to customers (Q2), questions 22 and 22.2; Questionnaire to competitors (Q1),
     question 26.
63   Questionnaire to customers (Q2), question 11.
64   Questionnaire to customers (Q2), question 21.
65   Questionnaire to customers (Q2), question 19.
66   Questionnaire to competitors (Q2), question 20; Questionnaire to competitors (Q1), question 24.
67   Form CO, paragraphs 1054 et seq.; Questionnaire to customers (Q2), questions 22.1
68   Questionnaire to competitors (Q1), question 25.
69   Questionnaire to customers (Q2), questions 22 and 22.2; Questionnaire to competitors (Q1),
     question 26.
                                                      9
 ---pagebreak---        regard the origin of the milk of non-PDO Italian-type cheese products, including
       mascarpone.70
       Conclusion
(57)   In light of the results of the market investigation and for the purpose of this
       decision, the Commission considers that mascarpone constitutes a separate product
       markets from other Italian-type fresh cheeses.
     (D)       Feta
(58)   Feta is a fresh Greek cheese made from ewe and goat milk in the mainland Greece
       and its department of Lesbos bearing a PDO label.
(59)   First, the majority of customers expressing views in the market investigation
       considered that Feta is a distinct product from other fresh cheeses and Feta fulfils
       different needs.71
(60)   However, several customers indicated that there are alternatives to Feta for certain
       uses such as fresh salads. A Belgian customer indicated that “Many alternative
       products can be substituted for Feta, especially for salad uses”;72 and French
       customers pointed out “Feta and mozzarella can be 2 alternatives in many
       consumption occasions for example in a composition of salad […]”73 and “Feta is
       mainly used for salads. It is substitutable with other cheeses”.74
(61)   Moreover, the majority of competitors that responded to the market investigation
       indicated that customers would switch to other cheeses if the prices of Feta were to
       increase.75
(62)   Second, with regard to Feta carrying PDO labels, the majority of the customers that
       responded to the market investigation indicated that PDO Feta and non-PDO
       products were not alternatives in terms of price and product characteristics.76
(63)   However, the majority of responsive customers and competitors submitted that
       end-customers would switch from PDO Feta to non-PDO products if the price of
       the PDO Feta were to increase;77
       Conclusion
(64)   In light of the results of the market investigation and for the purpose of this
       decision, the precise market definition can be left open as the Transaction does not
       raise serious doubts as to its compatibility with the internal market under any
       plausible product market definition.
70   Questionnaire to customers (Q2), question 11.
71   Questionnaire to customers (Q2), question 29.
72   Courtesy translation from French: “Beaucoup de produits alternatifs peuvent être substitués à la
     Feta, notamment pour des utilisations en salade”, Questionnaire to customers (Q2), question 29.1.
73   Courtesy translation from French: “[l]a Feta et la mozzarella peuvent être 2 alternatives dans de
     nombreuses occasion de consommation comme par exemple dans la composition de salade. […]”,
     Questionnaire to customers (Q2), question 29.1.
74   Courtesy translation from French: “[l]a Feta est principalement utilisée pour les salades. Elle est
     substituable avec d'autres fromages”, Questionnaire to customers (Q2), question 29.1.
75   Questionnaire to competitors (Q1), question 31.
76   Questionnaire to customers (Q2), question 37.
77   Questionnaire to customers (Q2), question 38; Questionnaire to competitors (Q1), question 33.
                                                     10
 ---pagebreak---      (E)       Gorgonzola
(65)  Gorgonzola is a soft blue cheese carrying a PDO label. The production of PDO
      Gorgonzola follows the rules established by the consortium. Both Lactalis and
      Nuova Castelli are producers and members of the Consorzio per la Tutela del
      Formaggio Gorgonzola PDO.
(66)  First, the vast majority of customers responding to the market investigation have
      submitted that Gorgonzola is not substitutable or only partially substitutable with
      other type of blue cheeses in terms of price and product characteristics78 A
      customer explained that “In some way, we could consider other “blue cheese” as
      “Roquefort”, “Bleu” or “stilton” as substitutes. But, they are stronger than
      Gorgonzola and can’t fit to all consumers. Gorgonzola is quite unique in terms of
      taste and texture”.79
(67)   Second, the majority of competitors that responded to the market investigation
       submitted that customers would switch to other blue cheeses (in particular
       roquefort) if the price of Gorgonzola would increase.80 However, the majority of
       responsive customers indicated that, if prices of Gorgonzola were to increase, end-
       consumers would not switch to other blue cheeses.81
(68)   Third, with regard to Gorgonzola carrying a PDO label, the majority of the
       customers that responded to the market investigation indicated that PDO and
       non-PDO Gorgonzola were not alternatives in terms of price and product
       characteristics.82
(69)  However, the majority of competitors responsive to the market investigation
      submitted that end-customers would switch from PDO to non-PDO Gorgonzola if
      the price of PDO Gorgonzola were to increase; 83 while the majority of responsive
       customers indicated that if prices of PDO Gorgonzola increased by 5-10%
       end-consumers will not switch to non-PDO Gorgonzola.84
       Conclusion
(70)  In light of the results of the market investigation and for the purpose of this
      decision, the precise market definition can be left open as the Transaction does not
       raise serious doubts as to its compatibility with the internal market under any
       plausible product market definition.
     (F)       Italian-type hard cheese
(71)  Both Parties sell different Italian-type hard cheeses, with and without PDO label,
      i.e. Parmigiano Reggiano PDO, Grana Padano PDO, Pecorino PDO, non-PDO
      Grana Padano-type and Parmigiano-type, as well as other hard cheeses.
(72)  The production of Parmigiano Reggiano PDO and Grana Padano PDO is organised
      by a relevant consortia. Consortia, while not producing or selling the cheese itself,
      attributes the production quotas and defines the rules that consortia members have
      to observe in order to use the PDO label and. These rules typically relate to the
78   Questionnaire to customers (Q2), question 23.
79   Questionnaire to customers (Q2), question 23.1.
80   Questionnaire to competitors (Q1), question 27.
81   Questionnaire to customers (Q2), question 24.
82   Questionnaire to customers (Q2), question 37.
83   Questionnaire to competitors (Q1), question 33.
84   Questionnaire to customers (Q2), question 38.
                                                     11
 ---pagebreak---         origin of the milk used (e.g. determined by a specific geographic area), production
        methods and the packaging.85 Nuova Castelli is a member of the Consorzio del
        Formaggio Parmigiano Reggiano and Consorzio Tutela Grana Padano. Lactalis
        does not produce Parmigiano Reggiano PDO and Grana Padano PDO.86
(73)    First, the Commission’s market investigation found that the consumption habits of
        customers may be different across Member States, with the large majority of
        customers in most countries considering Parmigiano Reggiano and Grana Padano
        to be substitutable or at least partially substitutable as Italian-type hard cheese for
        their main intended uses.87 For example, a customer explained regarding the
        alternatives for Parmigiano Reggiano: “there is pecorino, grana padano with
        similar characteristics and a lower price”88 , or as another customer stated:
        “Substitutable only by Grana Padano or [I]talian Hard Cheese”.89 Furthermore,
        some customers considered that, for example Parmigiano Reggiano can be
        substituted also with other hard cheeses: “could switch to non Italian type hard
        cheese or Grano Padano”,90 or as another customer submitted: “Grana Padano
        could be an alternative. Similarly as other hard cheeses for certain users who grate
        the cheese […]”.91
(74)    Second, the majority of customers and competitors expressing their views indicated
        that if prices of Parmigiano Reggiano or Grana Padano were to increase, end-
        consumers would switch to other cheeses.92 The majority of competitors expressing
        their views indicated that in case of price variation of Grana Padano or Parmigiano
        Reggiano customers will substitute one with the other.93 According to the market
        investigation, while the substitutability was particularly strong between Grana
        Padano and Parmigiano Reggiano, it was not limited to these Italian-type hard
        cheeses.94
(75)    Third, with regard to substitutability between Parmigiano Reggiano and Grana
        Padano carrying PDO labels, the majority of customers that responded to the
        market investigation indicated that PDO and non-PDO Parmigiano Reggiano and
        Grana Padano were not alternatives in terms of price and product characteristics95
        and end-customers would not switch from PDO to non-PDO Parmigiano Reggiano
        and Grana Padano if the price of the PDO products were to increase.96
85   Form CO, paragraphs 272-274.
86   Form CO, paragraph 279. According to the Notifying Party, Lactalis has a residual role as a seasoner
     (i.e. for aging the cheese) in Consorzio Tutela Grana Padano.
87   Questionnaire to customers (Q2), questions 25, 25.1 and 27.
88   Questionnaire to customers (Q2), questions 25.1.
89   Questionnaire to customers (Q2), questions 25.1.
90   Questionnaire to customers (Q2), questions 25.1.
91   Courtesy translation from French: “Le Grana Padano fournit une alternative. D'autres produits à
     pâte pressée également, pour certains utilisateurs (qui râpent le produit par exemple)” ;
     Questionnaire to customers (Q2), questions 25.1.
92   Questionnaire to customers (Q2), questions 26 and 26.1; Questionnaire to competitors (Q1),
     questions 28 and 28.1.; Questionnaire to customers (Q2), question 28; Questionnaire to competitors
     (Q1), questions 29.
93   Questionnaire to competitors (Q1), questions 29.1 and 30.
94   Questionnaire to customers (Q2), questions 26.1 and 28.1; Questionnaire to competitors (Q1),
     questions 28.1 and 29.1.
95   Questionnaire to customers (Q2), questions 37 and 38.
96   Questionnaire to customers (Q2), question 38.
                                                       12
 ---pagebreak--- (76)     However, the large majority of competitors expressing their views in the market
         investigation considered that, in case of a price increase of a PDO-type, the end-
         customers would switch to the non-PDO equivalent.97 Moreover, when asked about
         alternatives for Grana Padano, for example, some customers indicated that it would
         be substitutable: “With non PDO hard-cheese”98 , or, as another customer
         explained, if the prices for Grana Padano were to increase: “Some customers could
         switch to similar cheeses non PDO, with characteristics close to Grana Padano”.99
         Conclusion
(77)     In light of, the results of this market investigation, the information provided by the
         Parties and for the purpose of this decision, the Commission considers that the
         relevant market is broader than a singular variety of an Italian-type hard cheese.
         For the purpose of this Decision, the Commission will carry out the assessment in
         relation to the plausible market for Italian-hard cheeses.
4.3.2. Possible segmentation of the supply of private label and branded cheese
(78)     Both Parties supply branded and private label Italian-type cheeses to retailers.
         However, for the product markets considered, most of Lactalis’ sales are in
         branded products, while Nuova Castelli focuses mainly on the supply of private
         label products.
4.3.2.1. Commission’s precedents
(79)     In previous decisions, the Commission considered the distinction between branded
         and private label products, and in some cases it came to the conclusion that they
         belong to the same, albeit differentiated market.100
4.3.2.2. Notifying Party’s view
(80)     The Notifying Party submits that private label products and branded products
         compete head to head when they are sold to the end consumers; however, when
         they are sold to retailers, it is necessary to distinguish the supply of private label
         cheese from the supply of branded cheese.101
(81)     The Notifying Party argues that private label and branded products are procured
         separately and differently by retailers.102 Moreover, the role played by suppliers
         and retailers in these procedures is different.103 The Notifying Party explains that
         retailers procure private label products through separate tender procedures and they
         have full control over product characteristics (e.g. origin of milk, quality,
         packaging), as well as volumes, sales and marketing.104 In contrast, retailers and
         suppliers negotiate the supply of branded products bilaterally, in over the counter
         negotiations. These negotiations are done on the basis of product characteristics
         already determined by the supplier.105
97      Questionnaire to competitors (Q1), question 33.
98      Questionnaire to customers (Q2), questions 26.1 and question 25.1.
99      Questionnaire to customers (Q2), question 27.1.
100     Commission Decisions in Case M.6242 – Lactalis/Parmalat, recital 26; Commission Decisions in
        Case M.5046 – Friesland Foods/Campina, recital 529; Commission Decisions in Case M.4135 -
        Lactalis/Galbani, recital 16.
101     Form CO, paragraph 182.
102     Form CO, Section 2.1.1.
103     Form CO, Section 2.1.2.
104     Form CO, paragraphs 188 et seq.
105     Form CO, paragraphs 190 et seq.
                                                        13
 ---pagebreak--- 4.3.2.3. Commission’s assessment
(82)      First, the Commission notes that the results of the market investigation suggest that
          large majority of customers and competitors consider that branded and private label
          Italian-type cheeses compete.106 However, branded products can command a
          significant price difference even for products of very similar characteristics.107 As
          one customer explained: “In terms of texture, taste and smell, the private labels
          and branded labels are equivalent; the price of branded is generally higher.”108
          Given that the suppliers of branded products usually also supply private label
          products, the price difference would apply even for products manufactured by the
          same company.
(83)      From a demand side perspective, in the perception of consumers, brand for fresh
          cheese products is an important and recognised element. The majority of customers
          expressing their views in the market investigation listed proprietary brands, such as
          Galbani (Lactalis), Zeta, Casa Azzurra (Granarolo) as the strongest brand for
          different Italian-type cheeses.109 Only in few instances a private label was
          mentioned as the strongest brand. For example, a French customer mentioned that
          retailer’s private label is the strongest brand for ricotta and Italian-type hard
          cheeses, or few Italian customers mentioned Italian-type hard cheeses.110
(84)      Furthermore, the majority of customers expressing their views in the market
          investigation also considered that at least one of the Parties’ has a “must have
          brand”.111 For example, a customer explained: “Galbani is a must for cow milk
          mozzarella […]. It is also very important for buffalo milk mozzarella, ricotta and
          mascarpone”;112 or as another customer submitted: “Galbani Mozzarella
          (Lactalis) is the market leader in Brands and should be listed in every full-line food
          retailer”.113 The internal documents of the Notifying Party also refer to Galbani as
          the “Italians’ most loved cheese brand” and the “strongest brand in Italian Cheese
          markets”.114
(85)      Second, while customer recognition driven by a brand identifies a specific
          producers and is associated with specific qualitative expectation, which are driven
          by brand investment, advertising, packaging and indications; the private label
          products typically carry a retailer brand and are identified as a ‘less costly’
          alternative which may be in a somewhat lower price segment.115
106     Questionnaire to customers (Q2), questions 30 and 31; Questionnaire to competitors (Q1),
        question 32.
107     Questionnaire to customers (Q2), question 33.
108     Courtesy translation from French: “en termes de texture, goût et odeur les privat labels et branded
        labels sont équivalents; le prix des branded labels est généralement plus élevé”; Questionnaire to
        customers (Q2), question 31.1.
109     Questionnaire to customers (Q2), question 50.
110     Questionnaire to customers (Q2), question 50.
111     Questionnaire to customers (Q2), question 51.
112     Courtesy translation from French “Galbani est un incontournable de la mozzarella au lait de vache
        […]. Il est aussi très important sur la mozzarella au lait de bufflonne, la ricotta et le mascarpone”;
        Questionnaire to customers (Q2), question 51.1.
113     Questionnaire to customers (Q2), question 51.1.
114     Form CO, Annex 5.2.D., slide 5.
115     See, for example, Questionnaire to customers (Q2), question 32.1.
                                                         14
 ---pagebreak--- (86)   Third, the private label side of the market is also differentiated, with ‘entry’
       products, or white label, carrying an alternative brand denomination and simpler
       packaging than retailer brands, possibly of lower qualitative specifications and an
       even lower price.116
                     Figure 1 - Branded and private label: chain of substitution
                      Source: Commission’s figure (e.g. Carrefour FR, 26/09/19)
(87)   Fourth, the procurement of branded and private label products is different. The
       majority of customers expressing views suggested that they have separate
       procedures for sourcing branded and private label products.117
(88)   Branded cheese products are procured through bilateral negotiations. Branded
       cheese products are less substitutable and typically have to feature on shelves,
       particularly as regards the most recognised brands such as those held by Lactalis.118
       Private label cheese products are usually procured through tendering processes that
       are organised with concrete specifications.119 Given that a supplier does not need to
       invest in brand development and marketing, there are lower barriers to entry.
       Similarly, given the regular competitive tendering processes based primarily on
       price as a selection criteria, switching barriers for retailers are likely also lower.120
(89)   Fifth, despite such differentiation in terms of pricing, brand and characteristics,
       there is evidence that such a differentiated offer may be a 'continuum' of options
       available to the customer and for which there would be a chain of substitution. 121
116  Questionnaire to customers (Q2), questions 5, 5.1, 33 and 34.1.
117  Questionnaire to customers (Q2), questions 35 and 36.
118  Questionnaire to customers (Q2), question 51.
119  See, for example, Form CO, Annex 6.1.2.1.5.A; and Questionnaire to customers (Q2), question 53.
120  Questionnaire to customers (Q2b), question 4; see also Questionnaire to customers (Q2),
     questions 75, 78, 78.2; Questionnaire to competitors (Q1), question 88.1.
121  Questionnaire to customers (Q2), question 32. In addition, as tender specifications provided in the file
     indicate certain private label products seem to be benchmarked against a specific branded product,
     (Form CO, Annex 6.1.2.1.5 A). [.
                                                      15
 ---pagebreak--- (90)   Sixth, in this context, the different procurement mechanisms may not be sufficient
       to sustain a finding that pricing dynamics would significantly differ across the
       different products. Thus, even if, according to precedent, a separate market for
       procurement of private label products to be supplied under retailer brands may be
       considered, anti-competitive effects on such market, by affecting the constraint
       exerted by private label products in on-shelf competition, may eventually also lead
       to higher overall prices on the spectrum of products available including branded
       products.
(91)   Seventh, consistent with this, the Parties’ internal documents show that they track
       the market shares for both branded and private label products as competing in the
       same market.122 In addition, the Notifying Party’s internal document produced in
       the regular course of business reads for mascarpone market “Galbani competes
       with minor brand and PL that are more aggressive in terms of price and
       distribution”123 . A further example regarding the SWOT124 analysis for the ricotta
       market also shows that private label products exert direct competitive constraint on
       the branded products: Lactalis presents continuously growing private label as a
       ‘threat’, while Galbani - a leader brand – as a ‘strength’.125
(92)   Eighth, the Notifying Party explained that it considers private label when making
       strategic pricing and marketing decisions in order to avoid losing market shares to
       private label products.126 Accordingly, if Lactalis takes into account the prices of
       the competing products, it would indicate that private label exert a competitive
       constraint on the supply of branded products, too.
(93)   Furthermore, the Notifying Party’s internal documents suggest that, as regards
       specifically the Italian-type cheeses, the share of private label supplies has been
       increasing over the last years and represents in many geographic markets an
       important part of the overall market.127 The Commission notes that the market data
       submitted by the Notifying Party also indicate that for some Italian-type cheeses in
       certain countries, the increasing share of private label is achieved at the cost of
       branded products supplies.128 This in turn may indicate that retailers gain a stronger
       negotiation position vis- à -vis branded label suppliers, which have to compete for
       smaller available shelf space and the risk that it may further shrink because of
       retailers’ ability to increase volumes in private label segment. As the Notifying
       Party submits, the retailers decide on the amount of shelf space that they will
122  Parties’ response to the Commission’s request for information RFI 13, annexes 13-7-5, slide 14;
     13-6-4, slide 12.
123  Parties’ response to the Commission’s request for information RFI 13, annex 13-7-5, Slide 7.
124  Strengths-weaknesses-opportunities-threats analysis.
125  Parties’ response to the Commission’s request for information RFI 13, annex 13-7-5, Slide 26.
126  Form CO, paragraph 122, Parties’ response to the Commission’s request for information RFI 13,
     question 7, explaining “This is proof that Lactalis is under stringent competitive pressure from the
     private label products”. Given that private labels are considered “competitors” in the internal
     documents, see for example Annex 13-7-1, slide 14, “careful price management considering
     competitors’ index”, and 13-7-3, slide 10, “reducing our price gap Vs. competitor”.
127  Form CO, Annex 5.4.G, referring to the multiple European countries, for example, slide 6 (mozzarella
     with reference to Germany, France, UK, Poland, Belgium, Spain, Sweden, Portugal, etc.: “[Private
     label] MS growing everywhere”); slide 10 (mascarpone with reference to Germany, France, Portugal,
     Sweden, etc.: to the advantage of [Private labels] that reaches 69% MS).
128  Third-party data show that the share of private label in the overall market was increasing in the period
     of 2016-2018, in some countries, for example, regarding cow mozzarella in Germany, Sweden; ricotta
     in France, the UK, Italy; Italian-type hard cheeses in France, the UK, Sweden; Parties’ response to the
     Commission’s request for information RFI 23.
                                                       16
 ---pagebreak---          allocate to branded products and on the amount of shelf space they will allocate to
         private label products.129
(94)     Ninth, the Commission also observes that manufacturers of branded products, such
         as Italian suppliers Casa Azzurra, Lactalis and Nuova Castelli, as well as German
         suppliers Zott and Goldsteig, also feature on the Notifying Party’s list as the main
         private label suppliers.130 The Commission does not have evidence, which would
         indicate that manufacturers of Italian-type cheese would exclusively produce
         private label products. Accordingly, as manufacturing facilities for producing
         private and branded label products are the same, the suppliers would be able to
         switch from supplying branded to private label products and the other way around.
(95)     Tenth, the Notifying Party also explained that for producers focusing on branded
         cheese supply the private label orders are important “in terms of valuing idle
         capacities”131 . Accordingly, a shift in the output volumes of private label of the
         manufacturer focusing on branded products supplies would have an effect on the
         capacity utilisation and ultimately also on the cost structure and competitiveness of
         its supplies of branded products.
(96)     In light of the findings and the results of the market investigation, the Commission
         considers that while private label products exert a constraint on branded products,
         this may not be sufficient to exclude that branded products primarily compete in a
         different market. In any event, for the purposes of the present case, the exact
         market definition can be left open as the Transaction does not raise serious doubts
         as to its compatibility with the internal market under any plausible market
         definition.
4.4.   Production and sale of fresh dairy products
4.4.1. Commission’s precedents
(97)     In previous decisions, the Commission held that, within the supply of basic dairy
         products, a distinction ought to be made between fresh dairy products and long-life
         dairy products.132
(98)     With regard to fresh dairy products, these are generally produced from dairy
         products such as milk and cream, in which, among others, eggs, thickening agents
         (such as starch), sugar, flavours and/or fruits are added.133 Within fresh dairy
         products, the Commission has distinguished different products categories, namely
         fresh milk, fresh buttermilk or yoghurt.134
(99)     Concerning fresh dairy desserts, they represent a variety of ready-made sweet dairy
         desserts including custard, portion packs such as mousse, (rice) puddings,
         profiteroles, tiramisu and porridges. The Commission considered that fresh custard
129    Form CO, paragraph 192.
130    […].
131    Form CO, paragraph 85.
132    Commission Decision in Case M.6522 – Groupe Lactalis/Skanemejerier, recital 9; M.5046 –
       Friesland Foods/Campina, recital 141.
133    Commission Decision in Case M.6441 – Senoble/Agrial/Senagral JV, recital 45; Commission
       Decision in Case M.5046 – Friesland Foods/Campina, recitals 1225 - 1228.
134    Commission Decision in Case M.6522 – Groupe Lactalis/Skanemejerier, recital 139; Commission
       Decision in Case M.5046 – Friesland Foods/Campina, recital 167.
                                                   17
 ---pagebreak---         in gable top, porridge and portion pack dairy desserts constitute separate relevant
        product markets.135
4.4.2. Notifying Party’s view
(100)   The Notifying Party submits that, in many cases, consumers consider all types of
        desserts as substitutable. However, in the absence of any significant overlapping
        activities, the Notifying Party takes the view that the precise market definition may
        be left open.136
4.4.3. Commission’s assessment
(101)   According to the information provided by the Parties, Lactalis manufactures
        different types of fresh dairy desserts under its brand Galbani, including
        tiramisu;137 and that (ii) Nuova Castelli sells in limited volumes one type of fresh
        dairy desserts, namely tiramisu.138
(102)   As the Transaction does not raise serious doubts as to its compatibility with the
        internal market with respect to the production and sale of fresh dairy desserts
        (including tiramisu) under any plausible product market definition, the
        Commission considers that the precise market definition may be left open.
4.5.   Production and sale of butter
4.5.1. Commission’s precedents
(103)   In previous decisions, the Commission held that separate product markets exist for
        butter sold in bulk and butter sold in packets.139 Moreover, bulk butter constitutes a
        separate product market, different from the market for bulk yellow fats including
        margarine and liquid vegetable oils.140
(104)   The Commission also came to the conclusion that dairy bulk butter can also be
        divided into (i) basic butter (with a 82% fat content); (ii) butter oil (or non-
        fractionated butter oil, i.e., with a 99,8% fat content) and (iii) fractionated butter oil
        (or fractionated butter).141
(105)   In addition, the Commission held that vegetable fats (namely, margarine) are not in
        the packet butter market.142 The Commission, however, left open the question
        whether plain packet butter and packet butter with additives constituted separate
        markets.143
135    Commission Decision in Case M.6722 – Frieslandcampina/Zijerveld & Veldhuyzen And Den
       Hollander, recital 101 et seq.; Commission Decision in Case M.6522 – Groupe
       Lactalis/Skanemejerier, recital 14; Commission Decision in Case M.5046 – Friesland
       Foods/Campina, recital1272.
136    Form CO, paragraphs 390-394.
137    Form CO, paragraph 390.
138    Form CO, paragraph 391.
139    Commission Decision in Case M.6722– Frieslandcampina/Zijerveld & Veldhuyzen And Den
       Hollander, recitals 109-112.
140    Commission Decision in Case M.6119 – Arla/Hansa, recital 29; Commission Decision in Case
       M.5046 – Friesland Foods/Campina, recitals 824 - 825.
141    Commission Decision in Case M.5046– Friesland Foods Campina, recital 834.
142    Commission Decision in Case M.6119 – Arla/Hans, paragraph 30.
143    Commission Decision in Case M.6722 – FrieslandCampina/Zijerveld & Veldhuyzen and Den
       Hollander, paragraph 112.
                                                     18
 ---pagebreak--- 4.5.2. Notifying Party’s view
(106)     The Notifying Party submits that the Parties are active on the market for the
          production and sale of butter and that the Parties’ overlap is very limited.144
          Therefore, the Notifying Party takes the view that that the precise market definition
          may be left open.145
4.5.3. Commission’s assessment
(107)     As the Transaction does not raise serious doubts as to its compatibility with the
          internal market with respect to the market for the production and sale of butter
          under any plausible definition, the precise product market definition may be left
          open.
4.6.    Geographic market definition
4.6.1. Procurement of milk
4.6.1.1. Commission’s precedents
(108)     In previous cases,146 the Commission left open whether the geographic scope of the
          markets for the procurement of raw milk could be national or narrower, i.e.,
          regional or even local. As regards the Italian market, the Commission left open
          whether the relevant market for the procurement of raw milk should be defined as
          narrower than national because raw milk is perishable in nature and the maximum
          storage duration prior to further processing is limited.147
4.6.1.2. Notifying Party’s view
(109)     The Notifying Party submits that the markets for the procurement of milk are at
          least national, if not wider, comprising clusters of countries.148 The Notifying Party
          submits that this is particularly the case for Italy due to the fact that (i) procurement
          of milk may take place throughout Italy; (ii) milk can be easily transported from
          one region to another; (iii) imports of milk are frequent due to the insufficient level
          of Italian domestic milk production; and (iv) pricing conditions are broadly
          consistent throughout Italy.149
4.6.1.3. Commission’s assessment
(110)     The Parties’ activities only overlap in the procurement of raw cow’s milk in certain
          regions of Italy. Therefore, the competitive assessment of the Transaction will be
          carried out at a national level and to a certain extent in narrower areas in Italy.
(111)     However, for the purpose of this decision, the precise geographic market definition
          can be left open the Transaction does not raise serious doubts as to its compatibility
          with the internal market under any plausible market definition.
144     Form CO, paragraphs 402-403.
145     Form CO, paragraph 407.
146     Commission Decision in Case M.6119 – Arla/Hansa, recital 35; M.6611 – Arla Foods/Milk Link,
        recital 54.
147     Commission Decision in Case M.6242 – Lactalis/Parmalat, recital 30 et seq..
148     Form CO, paragraph 130.
149     Form CO, paragraphs 131-140.
                                                     19
 ---pagebreak--- 4.6.2. Supply of Italian-type cheese and Feta to retailers
4.6.2.1. Commission’s precedents
(112)     In previous cases, the Commission concluded that the markets for the supply of
          cheese are national in scope.150
4.6.2.2. Notifying Party’s view
(113)     In line with the Commission’s precedents, the Notifying Party argues that the
          markets for the supply of branded cheeses are national due to consumer
          preferences, price differences between Member States, and to the importance of
          local brands and strong national trademarks.151
(114)     However, the Notifying Party argues that the market for the supply of private-label
          cheese to retailers is wider than national because (i) customers are the retailers,
          therefore making consumer preferences and brands less relevant; (ii) retailers
          organise European-wide calls for tenders and some European retailers have
          regrouped their activities in buying alliances; (iii) suppliers from various Member
          States have the ability to supply cheeses across Europe; (iv) imports and exports of
          cheese are significant in the EU; (v) the labelling products does not constraint
          competition between suppliers from various Member States, and (vi) prices for
          private-label cheeses are homogenous across various Member States.152
4.6.2.3. Commission’s assessment
(115)     The market investigation confirms that the markets for the supply of cheese are
          national.
(116)     First, the large majority of customers that responded to the market investigation
          indicated that they negotiate contracts for the supply of branded and private label
          cheese at national level.153
(117)     Second, the vast majority of responsive customers indicated that the relevant
          geographic market for the supply of mozzarella, ricotta, mascarpone, hard Italian-
          type cheeses (Grana Padano, Parmigiano Reggiano) and Feta is national in
          scope.154
(118)     Third, seven customers that responded to the market investigation indicated that
          customers’ demand of Italian-type cheeses is substantially the same across EEA
          countries, while six customers indicated that it was different.155 However, the
          majority of responsive competitors indicated that end-customers’ demand for
          Italian-type cheeses and Feta are substantially different in terms of brands,
          customer preferences and product characteristics across EU countries.156
150     Commission Decision in Case M.7232 – Charterhouse/Nuova Castelli, recital 15; Commission
        Decision in Case M.6522 – Groupe Lactalis/Skanemejerier, recital 28; Commission Decision in Case
        M.4135 – Lactalis/Galbani, recital 18; Commission Decision in Case M.6242 – Lactalis/Parmalat,
        recital 55.
151     Form CO, paragraph 305.
152     Form CO, paragraphs 219 et seq.
153     Questionnaire to customers (Q2), questions 41 and 42.
154     Questionnaire to customers (Q2), question 43.
155     Questionnaire to customers (Q2), question 44.
156     Questionnaire to competitors (Q1), question 40.
                                                        20
 ---pagebreak--- (119)    Fourth, the majority of customers and competitors that responded to the market
         investigation indicated that prices of Italian-type cheeses are substantially different
         across different EEA countries. 157
(120)    For the purpose of this decision, the competitive assessment of the supply of
         Italian-type cheese and Feta to retailers will be carried out at the narrowest level,
         i.e. a national level; however, the precise geographic market definition can be left
         open as the Transaction does not raise serious doubts as to its compatibility with
         the internal market under any plausible geographic market definition.
4.6.3. Production and sale of fresh dairy products
4.6.3.1. Commission’s precedents
(121)    In previous cases, the Commission considered that the relevant market for fresh
         dairy desserts would be national but the exact market definition was left open.158
(122)    Regarding portion pack dairy desserts, the Commission considered that it could be
         wider than national in scope.159
4.6.3.2. Notifying Party’s view
(123)    The Notifying Party takes the view that, in the absence of any significant
         overlapping activities, the precise geographic definition may be left open.160
4.6.3.3. Commission’s assessment
(124)    For the purpose of this decision, the competitive assessment of the Transaction will
         be carried out at a national level; however, the precise geographic market definition
         can be left open as the Transaction does not raise serious doubts as to its
         compatibility with the internal market under any plausible geographic market
         definition.
4.6.4. Production and sale of butter
4.6.4.1. Commission’s precedents
(125)    In previous cases, the Commission considered the geographic market for bulk
         butter, fractionated butter oil and non-fractionated butter oil to be EEA-wide.161
(126)    With regard to packet butter, the Commission considered in previous decisions that
         the relevant geographic market was wider than national and left open whether it
         was EEA-wide but deemed to be at least regional (i.e. including more than one
         Member State).162
4.6.4.2. Notifying Party’s view
(127)    The Notifying Party considers that the markets for butter is EEA-wide, or at least
         regional. However, in the absence of significant overlapping activities of the
157     Questionnaire to customers (Q2), question 45. Questionnaire to competitors (Q1), question 41.
158     Commission Decision in Case M.6119 – Arla/Hansa, recital 36; Commission Decision in Case
        M.5046 – Friesland Foods/Campina, recital 230.
159     Commission Decision in Case M.6722 – Frieslandcampina/Zijerveld & Veldhuyzen And Den
        Hollander, recitals 106-108.
160     Form CO, paragraph 295.
161     Commission Decision in Case M.6627 – Arla Foods/Milch-Union Hocheifel, recital 88.
162     Commission Decision in Case M.6627 – Arla Foods/Milch-Union Hocheifel, recital 88.
                                                       21
 ---pagebreak---          Parties on these markets, the Notifying Party submits that this question may be left
         open.163
4.6.4.3. Commission’s assessment
(128)    For the purposes of this decision, the competitive assessment of the Transaction
         will be carried out at the narrowest level possible, i.e. at a national level. However,
         the precise geographic market definition can be left open as the Transaction does
         not raise serious doubts as to its compatibility with the internal market under any
         plausible geographic market definition.
5.      COMPETITIVE ASSESSMENT
5.1.    Legal framework
(129)    Article 2 of the Merger Regulation requires the Commission to examine whether
         notified concentrations are compatible with the internal market, by assessing
         whether they would significantly impede effective competition in the internal
         market or in a substantial part of it.
(130)    The Commission Guidelines on the assessment of horizontal mergers under the
         Merger Regulation (the "Horizontal Merger Guidelines") distinguish two main
         ways in which mergers between actual or potential competitors on the same
         relevant market may significantly impede effective competition, namely non-
         coordinated effects and coordinated effects.164
(131)    Non-coordinated effects may significantly impede effective competition by
         eliminating the competitive constraint imposed by one merging party on the other,
         as a result of which the merged entity would have increased market power without
         resorting to coordinated behaviour. According to recital (25) of the preamble of the
         Merger Regulation, a significant impediment to effective competition can result
         from the anticompetitive effects of a concentration even if the merged entity would
         not have a dominant position on the market concerned. In this regard, the
         Horizontal Merger Guidelines consider not only the direct loss of competition
         between the merging firms, but also the reduction in competitive pressure on non-
         merging firms in the same market that could be brought about by the merger.165
(132)    The Horizontal Merger Guidelines list a number of factors, which may influence
         the rise of substantial non-coordinated effects from a merger, such as: the large
         market shares of the merging firms; the fact that the merging firms are close
         competitors; the limited possibilities for customers to switch suppliers; or the fact
         that the merger would eliminate an important competitive force. The list of factors
         applies equally if a merger would create or strengthen a dominant position, or
         would otherwise significantly impede effective competition due to non-coordinated
         effects. Furthermore, not all of those factors need to be present to make significant
         non-coordinated effects likely and the list itself is not an exhaustive list.166
163     Form CO, paragraph 307.
164     OJ C 31, 05.02.2004, p. 5. The remainder of this decision focuses on non-coordinated effects.
165     Horizontal Merger Guidelines, paragraphs 24-38.
166     Horizontal Merger Guidelines, paragraphs 24-38.
                                                         22
 ---pagebreak--- 5.2.   Methodology for market shares data
5.2.1. The market shares submitted by the Notifying Party
(133)    According to the Horizontal Merger Guidelines and the Non-Horizontal Merger
         Guidelines, market shares constitute useful first indications of the market structure
         and of the competitive importance of the market players.
(134)    The Notifying Party submitted market shares in volume and value, when available,
         for each plausible product and geographic market. The market shares were based
         on the Parties’ actual sales of the Italian-type cheese and Feta-type cheese products
         as recorded internally at the wholesale level.
(135)    The Notifying Party used retail data as a proxy for the total market size. Subject to
         availability, the market size for volume market shares was based on the Nielsen or
         IRI panel data providers, who record the total volumes of cheese sold to end-
         consumers at retail level nationally. Similarly, subject to availability, the market
         size for value market shares was based on the total value recorded by the
         panels.167168 For the plausible product markets where panel data for 2018 was
         unavailable, the Notifying Party used 2016 or 2017 panel data.169 For the plausible
         product markets where panel data was not available to the Notifying Party for any
         years, the Notifying Party used market size estimates based on (i) Nuova Castelli’s
         estimates recorded in internal documents170 ; (ii) Eurostat trade data171 ; (iii) per
         capita consumption approach172 . Finally, for the plausible markets where no
         estimates for the market size were available, the Notifying Party confirmed that
167    In order to estimate the total market size at wholesale level, the Notifying Party removed the retailers’
       margin from the total retail value, as recorded by the panels. The Notifying Party assumed that the
       retailers’ margins on Parties’ products are representative of their margins for the same cheese
       category. Briefing Memorandum, submitted by Analysis Group on 2019 October 23.
168    Panel data was missing for a number of markets. The Notifying Party claimed that given the lack of
       information, market value estimations were uncertain, and the value market shares provided for these
       markets are less reliable than volume market shares. The Commission only took into account the
       value market shares based on third-party panel data. Parties’ response to Commission’s request for
       information RFI 26, question 1.1.
169    For example, this concerns Italian-type hard cheese in Poland (Parties’ response to Commission’s
       request for information RFI 14); cow milk mozzarella, Feta, Italian-type hard cheese in Finland
       (Parties’ response to Commission’s request for information RFI 22).
170    This concerns Buffalo Mozzarella in Denmark, Poland; Italian-type hard cheese in Germany, Parties’
       response to Commission’s request for information RFI 14.
171    The Notifying Party counted the consumption as a difference between imports and exports under the
       conservative assumption that no production takes place internally in the country of interest. The
       Notifying Party then assumed that 50% of all consumption takes place OOH, which provides a market
       size estimate for retail sector. This assumption is conservative; a 2018 document prepared for the
       French parliament indicates that OOH consumption represents 40% of all cheese volumes. The
       following methodology was applied to: Feta in Poland and Portugal; cow milk mozzarella in Bulgaria
       and Greece; buffalo mozzarella, Italian-type hard cheese, ricotta and mascarpone in Greece; Italian-
       type hard cheese in Bulgaria, Hungary and Malta. Parties’ response to Commission’s request for
       information RFI 22, Annex RFI 22-1-I.
172    The Notifying Party used the per capita consumption in other countries as a proxy. For example,
       missing markets for Finland were estimated using the per capita consumption in Denmark and
       Sweden. The following methodology was applied to buffalo milk mozzarella, Gorgonzola,
       mascarpone, ricotta in Finland; Italian-type hard cheese in the Netherlands, Bulgaria and Hungary.
       Parties’ response to Commission’s request for information RFI 22, Annex RFI 22-1-I.
                                                         23
 ---pagebreak---         their combined market shares would be below 20% for these markets due to low
        sales.173
(136)   The Notifying Party argued that panels tend to underestimate the real size of the
        market, as they do not cover all outlets active the retail sector and do not capture
        small sales, and proposed to increase the market size by […] for branded cheese,
        and branded and private cheese when accounted together174 . This methodology was
        applied for the market size estimates derived from the panel data. Moreover, the
        Notifying Party stated that panels tend to underestimate the market size for private
        label products to a greater extent that for branded products. This is because private
        label cheese products are also used internally by retailers to sell in their on-
        premises restaurants or are used as ingredient for the sale of deli foods, such as
        lasagne, and such sales would not be captured by panels.175 Therefore, the
        Notifying Party proposed to amend the market size for the plausible markets of
        private label products by multiplying the total volume of private label products sold
        downstream by […] for mozzarella and by […] for mascarpone, ricotta and
        Gorgonzola due to the fact that such cheeses are more widely used as ingredients in
        deli dishes than mozzarella.176 The Commission noted that although multipliers for
        the market size of private label supply were introduced, the Notifying Party’s
        market shares are still likely overstated, as in some instances they are larger than
        100% and are not in line with the market share estimates of other active players
        provided by the Notifying Party or the results from the market investigation.177 The
        Commission notes that because different multipliers were used to adjust market
        sizes, the sum of estimated market sizes separately for branded (multiplied by […])
        and private label (multiplied by […]or […]) does not fully match the estimated size
        for branded and private label combined (multiplied by […]).178
(137)   The Commission examined the methodology and the market shares provided by the
        Notifying Party, and used the market shares in volume as a primary tool for
        determining the competitive strength of the Parties.179 Moreover, in cases of
        differentiated products, sales in value and their associated market share also reflect
        the relative position and strength of each supplier. This notion does not apply to
        private label products, which are not differentiated. However, for branded goods,
173   For example, this concerns Italian-type hard cheese in Belgium. Parties’ response to Commission’s
      request for information RFI 22.
174   Parties’ response to Commission’s request for information RFI 11, question 1.
175   Parties’ response to Commission’s request for information RFI 11, question 1.10.
176   Parties’ response to Commission’s request for information RFI 11, question 1.11.
177   For example, this concerns private label supply of ricotta in the UK, where the combined market
      shares provided by the Notifying Party are exceeding 100%, but the Notifying Party submitted that
      other players are active in private label supply of ricotta, and another private label supply provider
      was identified during the market investigation.
178   This is a conservative assumption because the assessment of the private and label markets combined
      disregards the fact that some of the private sales are used by retailers internally. Although they are not
      reflected in the estimated market size, all private label sales of the Parties are included when
      determining the market shares.
179   In line with the product market definition, the Commission assessed Italian-type hard cheeses as one
      market. The market shares were based on all the Parties’ sales of Italian-type hard cheese. For
      Lactalis, they include Parmigiano Reggiano DOP, Grana Padano DOP, Gran Gusto (Parmigiano- and
      Grana-type cheese, without DOP) and other Hard Cheese. For Nuova Castelli, they include
      Parmigiano Reggiano DOP, Grana Padano DOP, Gran Castelli (Parmigiano- and Grana-type cheese,
      without DOP), Pecorino Romano DOP, Pecorino and other Hard Cheese. Parties’ response to
      Commission’s request for information RFI 14, question 1.1.
                                                         24
 ---pagebreak---          the Commission used market shares in value to supplement the examination of the
         Parties’ competitive position in addition to market shares in volume.
5.2.2. Market share analysis developed by the Commission
(138)    The Commission has conducted a further quantitative analysis to verify the
         accurateness of the volume market shares provided by the Notifying Party. Subject
         to availability, the Commission used the panel sales data as the basis for analysing
         the market structure and other competitors in the market for the calendar year
         2018.180 Typically, panel data records the sales of various brands and the total
         volume and value data per type of product in a given year. Although the sales of
         private label are recorded under one entry and do not specify the wholesale
         supplier, the sales information on branded goods allows further examination on the
         Parties’ market share and evaluation of their competitors for the plausible markets
         of branded goods.
(139)    The Commission undertook this approach as the Notifying Party also uses panel
         data in order to track their own and competitors’ developments in the market in the
         ordinary course of business.181 The panel data was provided by Lactalis, which
         noted that they request granular per-brand data only concerning their largest
         competitors. As a result, in some instances the sales of Nuova Castelli were
         included in the total sales captured by the panels, but were not specified under a
         stand-alone brand due to its insignificant sales share. To address this, the
         Commission identified such instances where the Parties had internal sales recorded,
         but no entry for these sales appeared in the panel. Based on the Parties’ internal
         wholesale sales data182 , the Commission introduced sales of branded products in
         such instances, scaled down by […].183 The Commission did not make any other
         adjustments to total market size and the sales that were actually recorded by the
         panels and allocated to various competitors, including Lactalis and Nuova Castelli.
(140)    The Commission reconstructed market shares based on the Parties’ sales and total
         sales recorded by the panel at retail level for branded products.
(141)    Moreover, the Commission also used the panel data to determine the Parties’ sales
         share in the combined markets of branded and private label goods. Given that panel
         data does not recognize the supplier at wholesale level for private label products,
         the Commission introduced the actual sales data of the Parties, scaled down by
         […], and reported the remaining share of private label for other unspecified
         competitors. This approach follows the same methodology as the one introduced by
         the Notifying Party for the market shares calculations. In some instances, the
         adjusted Parties’ sales of private label goods were still larger than the total private
         label sales recorded by the panels. This confirms the Notifying Party’s allegation
         that panels tend to underestimate the total market size for private label.
(142)    By following this approach, the Commission used third-party data to evaluate the
         Parties share in the Italian-type cheese and Feta-type cheese products with the
         adjustments discussed in the paragraphs above.
180    Parties’ response to Commission’s request for information RFI 23, Annex RFI 23-1.
181    Parties’ response to Commission’s request for information RFI 11, question 1.2.
182    Parties’ response to Commission’s request for information RFI 22, Annex 2019-11-18 - Country
       volume market shares.
183    The multiplier of […] was used to account for the fact the panels do not cover all market. The
       Commission used the same multiplier as suggested by the Notifying Party for the market share
       estimation, as explained above.
                                                        25
 ---pagebreak--- (143)    The Commission finds that the market shares as recomputed (Adjusted market
         shares) are in principle a more reliable metric of overall market interaction as they
         rely on all available data, including third party data, adopt a credible approach
         concerning underlying assumptions, provide results which are consistent with the
         estimated total size of the market and do not result in shares higher than 100%, and
         are corroborated by qualitative evidence gathered in the market investigation.
(144)    For the above principle, in principle, and subject to data availability, the
         Commission will use the Adjusted market shares based on panels as the primary
         and most reliable source of quantitative information to assess the Parties’ position
         for the plausible markets of branded goods as well as branded and private label
         combined. When data is not available, reference will be made to shares as
         submitted by the Notifying Party.
5.3.   Horizontal non-coordinated effects
(145)    Based on the market share data submitted by the Parties, the concentration would
         give rise to putative horizontally affected markets in Italy (Section 5.4), France
         (Section 5.5), Belgium (Section 5.13), Denmark (Section 5.10), Finland
         (Section 5.12), Germany (Section 5.7), the Netherlands (Section 5.14), Poland
         (Section 5.8), Portugal (Section 5.11), Spain (Section 5.15), Sweden (Section 5.9),
         and the United Kingdom (Section 5.6).
5.4.   Italy
(146)    Based on the market share data submitted by the Parties and in light of the
         methodology used by the Commission (see Section 5.2), the Transaction gives rise
         to the following horizontally affected markets in Italy: cow milk mozzarella
         (Section 5.4.1); buffalo milk mozzarella (Section 5.4.2); ricotta (Section 5.4.4) and
         Gorgonzola (Section 5.4.3);.
5.4.1. Cow milk mozzarella
(147)    Both Lactalis and Nuova Castelli supply branded and private label cow milk
         mozzarella to retailers in Italy. As outlined by the market shares (see Table 1
         below), the main overlap between the Parties is in the supply of private label cow
         milk mozzarella.
       (A)         Branded cow milk mozzarella
(148)    For branded products, based on the Adjusted market shares, the Parties have a
         combined share of [40-50]% in the supply of branded cow milk mozzarella to
         retailers in Italy in 2018, with a limited increment of [0-5]%.184
(149)    First, as regards branded cow milk mozzarella, the Transaction results in an
         affected market only because of Lactalis’ large market presence with branded
         products, with strong and widely recognised brands, in particular Galbani,
         Vallelata, and Invernizzi.185
(150)    Second, this is consistent with the fact that, in Italy, Nuova Castelli does not enjoy
         strong brand presence in cow milk mozzarella, but focuses primarily on private
         label supplies of this product to retailers. Thus, the Transaction will bring a limited
         increment to Lactalis’ market share of [0-5]%.
184    The combined value market shares for branded segment are lower than the volume shares provided by
       the Parties, but both still overstate the Parties’ position compared to panel data.
185    Parties’ response to Commission’s request for information RFI 7, question 1.
                                                            26
 ---pagebreak--- (151)   Third, several other strong competitors of Lactalis are active in the branded space,
        for instance Granarolo, Sabelli and Brimi. Overall, the Parties’ competitors in the
        branded segment have a strong presence with important brands, which account for
        over [50-60]% of this market segment in Italy.
(152)   Fourth, the Adjusted market shares point at a fragmented set of suppliers of
        branded cow milk mozzarella in Italy, which are as large as or larger than Nuova
        Castelli.
(153)   Moreover, the results of the market investigation reveal that a number of credible
        competitors can and do offer volumes of branded cow milk mozzarella to retailers
        in Italy and compete in the negotiations organised by retailers. Data collected from
        retailers show that a majority of them source from a relatively wide range of
        suppliers of branded cow milk mozzarella. In particular, the data shows that
        in 2018 most retailers have sourced from one or more suppliers other than the
        Parties.186
(154)   Therefore, the branded segment of cow milk mozzarella will continue having a
        multitude of credible suppliers with established commercial relations with retailers
        in Italy.
(155)   The Commission has also considered in its assessment the arguments presented in
        the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion, the availability of other
        suppliers, the ability to switch suppliers and the impact of the Transaction that also
        apply to the assessment of branded cow milk mozzarella.
(156)   In conclusion, based on the information available to the Commission and provided
        by Parties, the Commission finds that the Transaction does not raise serious doubts
        as to its compatibility with the internal market with regard to the plausible market
        of branded cow milk mozzarella in Italy.
      (B)         Private label cow milk mozzarella
(157)   For private label, the Parties have a combined share in the supply of private label
        cow milk mozzarella to retailers in Italy of [20-30]%, with an increment of
        [10-20]%.
(158)   First, in the private label segment, based on the Notifying Party’s estimates, there is
        a significant number of alternative private label suppliers in Italy: Caseificio
        Pugliese: [10-20]%; Granarolo: [5-10]%; Centro Latte Bressanone: [5-10]%;
        Trevisanalat: [5-10]%; Caseificio Villa: [0-5]%; Caseificio Morozzese: [0-5]%;
        Palazzo SNC [0-5]%; Sabelli: [0-5]%; Sanguedolce: [0-5]%; Ecolat: [0-5]%;
        Alimenta SpA: [0-5]% and Bustaffa: [0-5]%.187 These are viable competitors that
        currently offer volumes of cow milk mozzarella to retailers and will continue to
        compete with the merged entity in Italy in tenders organised by retailers. This is in
        line with the data collected from retailers that show that a majority of them source
        from a relatively wide range of suppliers of cow milk mozzarella. In particular, the
        data shows that a majority of retailers have sourced from two or more suppliers
        other than the Parties in 2018.188
186   Questionnaire to customers (Q2), question 66.
187   Parties’ response to Commission’s request for information RFI 22.
188   Questionnaire to customers (Q2), question 70.
                                                       27
 ---pagebreak--- (159)   The Commission has also considered in its assessment of this plausible market the
        arguments presented in the below section as regards the overall market, and in
        particular concerning the absence of significant barriers to entry and expansion, the
        availability of other suppliers, the ability to switch suppliers and the impact of the
        Transaction that also apply to the assessment of private label cow milk mozzarella.
(160)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the plausible market of private label cow milk mozzarella in Italy.
      (C)        Overall market for cow milk mozzarella in Italy
(161)   On the overall market for the supply of branded and private label cow milk
        mozzarella to retailers in Italy, based on the Commission’s Adjusted market shares,
        the Parties have a combined market share in 2018 of [40-50]%, with a moderate
        increment of [5-10]%.
                                                 Table 1
                                 Italy 2018, Cow milk mozzarella189
                      Branded and private label – Adjusted market shares
              Competitor                              Sales, tons        Market Share
              Lactalis – branded                           […]               [20-30]%
              Lactalis – private label                     […]                 [0-5]%
              Nuova Castelli - branded                     […]                 [0-5]%
              Nuova Castelli – private label               […]                [5-10]%
              Combined Parties PL + B                      […]               [40-50]%
              Granarolo                                    […]                [5-10]%
              Brimi                                        […]                 [0-5]%
              Sabelli                                      […]                 [0-5]%
              Trevisanalat Spa                             […]                 [0-5]%
              Others – branded                             […]               [20-30]%
              Others – private label                       […]               [20-30]%
              Total sales                                112464                 100%
(162)   First, the Transaction will bring a moderate increment to Lactalis’ market shares.
        This increment mainly relates to the supply of products to be resold under private
        label by retailers.
(163)   Second, the Commission observes the overall market for branded and private label
        cow milk mozzarella in Italy appears to be extremely fragmented (see Table 1
        below) with several active players both in the branded and private label and the
        production evenly distributed throughout the Italian territory.190
189   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
190   Parties’ submission “Briefing Memorandum on Mozzarella”, dated 23.10.2019, Annex 4-A.
                                                       28
 ---pagebreak--- (164)   Third, as outlined in Section 4.3.2, the market for the supply of cow milk
        mozzarella to retailers is a differentiated market across sales channels, where
        suppliers can compete in branded and in private label cheese. Although the
        presence of suppliers in the same sales channel could be indicative of closeness of
        competition between them, the pricing of private label products has some effect on
        the pricing ability in the branded segment of the market.
(165)   Beside the considerations concerning the structure and shares of the cow milk
        mozzarella market, the Commission considers that the Transaction does not raise
        serious doubts for the following reasons.
(166)   First, the Commission finds, based on the results of the market investigation, that
        barriers to entry are not high for suppliers of cow milk mozzarella in Italy.
(167)   Second, as regards barriers to expansion, the results of the market investigation
        suggest that a number of suppliers active in Italy could increase supply in the short
        term without incurring in significant cost.
(168)   When market conditions are such that competitors have sufficient capacity and find
        it profitable to expand output sufficiently, the Commission is unlikely to find that
        the merger would significantly impede effective competition.191 Conversely, when
        market conditions are such that the competitors of the merged entity are unlikely to
        increase their supply significantly should prices increase, the merged entity may
        have an incentive to reduce output below the combined pre-merger levels thereby
        raising market prices.192
(169)   The Notifying Party argues that at the EEA level the production capacity for cow
        milk mozzarella is almost double than the total EEA supply.193 The Commission
        was not able to verify the estimates of the Parties in its market investigation.
        However, the evidence in the file indicates that several competitors, including non-
        Italian manufacturers with production assets in the Italian territory, could profitably
        expand output with their current production assets.
(170)   Some competitors have referred to their recent and on-going investments in
        capacity expansion.194 Several market respondents indicated that the cost and time
        required to build additional lines to expand production are not significant.195 In
        particular the majority of competitors that expressed a view in the market
        investigation indicated that they are able to quickly expand production in Italy of
        Italian-type cheese and, thus, can decide to enter another EEA market for Italian-
        type cheeses in a relatively short timeframe.196
(171)   Moreover, the potential expansion of production capacity is not merely
        hypothetical but corroborated by specific examples relating to the Italian market. In
        particular, the Commission found that a number of the Parties’ competitors in Italy
191   Horizontal Merger Guidelines, paragraph 33.
192   Horizontal Merger Guidelines, paragraph 32.
193   Parties’ submission “Briefing memorandum No 3” dated 20 November 2019, paragraph 23, which
      includes dry mozzarella and mozzarella in brine.
194   Non-confidential minutes of a call with a competitor, 23 October 2019; Non-confidential minutes of a
      call with a competitor, 5 November2019.
195   Questionnaire to customers (Q2), question 78.
196   Questionnaire to competitors (Q1), question 60.
                                                       29
 ---pagebreak---         have expanded their production of cow milk mozzarella in the last 3 years without
        having to incur into any significant capital investments.197
(172)   Furthermore, the Commission has assessed whether credible and imminent
        expansion of the existing production of cow milk mozzarella from the Parties’
        rivals would be likely to occur. The market investigation has revealed that more
        than one of the Parties’ competitors in Italy is planning to expand significantly and
        structurally their production capability of cow milk mozzarella over the course of
        the next 3 years and have already mobilised funds to this effect.198 The
        Commission, therefore, finds that there are no significant barriers to entry or
        expansion in cow milk mozzarella in Italy and that alternative suppliers seem to
        have sufficient capacity and incentives to expand the production volume, should
        the merged entity increase prices in Italy.
(173)   Third, as regards logistics and distribution, competitors and customers in Italy
        confirmed in the market investigation that distribution on the Italian territory is
        already fragmented and organised in a way that it is possible to distribute fresh
        products on the Italian territory without incurring in significant costs, even for
        smaller manufacturers.
(174)   Fourth, with regard to the use of milk from Italy in the production of cow milk
        mozzarella, this is regarded by many Italian customers as an important element of
        consumer preference, and it is the object of specific on-label indications. In this
        regard, however, the competitive constraint exerted by Nuova Castelli is low
        because the company sources most of the milk used to manufacture mozzarella
        from outside of Italy.199
(175)   Fifth, the Italian market is also characterised by low barriers to switching for the
        products mainly supplied by Nuova Castelli. While the branded position of Lactalis
        seem to command customer loyalty, the vast majority of the retailers who
        responded to the Commission’s requests for information stated that it is possible to
        switch to different suppliers of mozzarella for the type of cow milk mozzarella
        products supplied by Nuova Castelli.200 Most of the retailers noted that they have
        switched to a different supplier of mozzarella over the past 3 years.201 This
        suggests that customer switching costs for the supply of cow milk mozzarella in
        Italy are not significant. This also indicates that there is a dynamic and fragmented
        range of viable suppliers of cow milk mozzarella in Italy.
(176)   Sixth, as regards the impact of the Transaction, the majority of retailers in Italy that
        expressed a view during the market investigation held that there will be no change
        post-Transaction with respect to the competitive conditions in relation to the supply
        of cow-milk mozzarella.202 Moreover, the majority of responsive retailers in Italy
        believe that the Transaction will have no impact on the market or on their
        companies.203
197   Questionnaire to competitors (Q1b), question 10.
198   Non-confidential minutes of a call with a competitor, 23 October 2019; Non-confidential minutes of a
      call with a competitor, 5 November2019.
199   Form CO, paragraphs 435 and 436.
200   Questionnaire to customers (Q2), question 73.
201   Questionnaire to customers (Q2), question 72.
202   Questionnaire to customers (Q2), question 123.
203   Questionnaire to customers (Q2), question 125.
                                                       30
 ---pagebreak--- (177)   Finally, the Commission found that the Transaction does not raise serious doubts as
        to its compatibility with the internal market on the plausible markets for private
        label cow milk mozzarella in Italy as well as branded cow milk market mozzarella
        in Italy.
(178)   Based on the above considerations and in the light of the results of the market
        investigation, the Commission considers that the concentration does not raise
        serious doubts as to its compatibility with the internal market as regards the overall
        market for cow milk mozzarella in Italy.
5.4.2. Buffalo milk mozzarella
(179)    Lactalis supplies only small volumes of branded buffalo milk mozzarella to
         retailers in Italy, whereas Nuova Castelli supplies both branded and private label
         mozzarella.
(180)    The Parties’ activities in buffalo milk mozzarella in Italy result in an affected
         market when considering the supply of branded buffalo milk mozzarella to retailers
         in Italy, as well as the overall market for buffalo milk mozzarella in Italy.
       (A)        Branded buffalo milk mozzarella.
(181)    For branded products, based on the Commission’s market share analysis, the
         combined Adjusted market shares for branded buffalo milk mozzarella are
         [20-30]%, with a moderate increment of [5-10]% due to Lactalis’ moderate
        branded presence204 As pointed out by the moderate increment in the market for
        branded buffalo milk mozzarella, in Italy Lactalis trades limited volumes of
        branded buffalo milk mozzarella produced by third parties through its brand
        Galbani (Vallelata). Conversely, in Italy Nuova Castelli enjoys brand presence in
        relation to buffalo milk mozzarella through its subsidiary Mandara. Additionally,
        Nuova Castelli supplies private label buffalo milk mozzarella to retailers.
(182)   Second, the results of the market investigation point toward a fragmented market.
        Market participants named a broad number of potential supply options for buffalo
        milk mozzarella, in particular Fattorie Garofalo, Caseificio Tre Stelle, Spinosa,
        Cilento, Pettinicchio, Francia Latticini, Caseificio Cirigliana, Diano Casearia,
        Caseificio Principe and Podere dei Leoni.205
(183)   This extremely diversified picture is evidenced by the fact that the combined share
        of the Parties’ competitors in branded buffalo milk mozzarella exceeds [50-60]%,
        with Francia’s and Spinosa’s shares each approximately equivalent to the
        increment triggered by the Transaction.
(184)   The Commission has also considered in its assessment of this plausible market the
        arguments presented in the below section as regards the overall market, and in
        particular concerning the absence of significant barriers to entry and expansion, the
        availability of other suppliers, the ability to switch suppliers and the impact of the
        Transaction that also apply to the assessment of branded buffalo milk mozzarella.
(185)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the plausible market of branded buffalo milk mozzarella in Italy.
204    The combined value market shares for branded segment are in line with the volume shares provided
       by the Parties, and both underestimate the Parties’ position compared to panel data.
205    Questionnaire to customers (Q2), questions 66 and 70.
                                                         31
 ---pagebreak---       (B)        Overall market for buffalo milk mozzarella in Italy
(186)   Based on the Commission’s Adjusted market shares, the Parties’ combined market
        shares are [20-30]%, with a moderate increment of [0-5]%.
                                                 Table 2
                               Italy 2018, Buffalo milk mozzarella206
                      Branded and private label – Adjusted market shares
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]                 [0-5]%
              Nuova Castelli - branded                     […]               [10-20]%
              Nuova Castelli – private label               […]               [10-20]%
              Combined Parties PL + B                      […]               [20-30]%
              Francia                                      […]                [5-10]%
              Spinosa                                      […]                 [0-5]%
              Others - branded                             […]               [40-50]%
              Others – private label                       […]               [10-20]%
              Total sales                                 13603                 100%
(187)   First, the Transaction will bring a moderate increment to Nuova Castelli’ market
        shares, due to Lactalis moderate branded presence.
(188)   Second, the presence of the Parties’ competitors is strong and a significant number
        of producers are active in the market for buffalo milk mozzarella with access to
        retailers in Italy, for instance Francia and Spinosa’s shares each approximately
        equivalent to the increment triggered by the Transaction (see Table 2 above).
(189)   The above finding, based on the Parties’ and their competitors’ shares on the
        overall market for buffalo milk mozzarella, was corroborated in the market
        investigation, which pointed at multiple supplier options. As an illustration, an
        Italian retailer indicated that “the market for buffalo milk mozzarella is extremely
        fragmented.”207 This was confirmed by the Parties’ competitors, a number of
        which qualified the market for buffalo milk mozzarella as particularly
        fragmented.208
(190)   As indicated in paragraph (182) above, market participants named a broad number
        of potential supply options for buffalo milk mozzarella, in particular Fattorie
        Garofalo, Caseificio Tre Stelle, Spinosa, Cilento, Pettinicchio, Francia Latticini,
        Caseificio Cirigliana, Diano Casearia, Caseificio Principe, Podere dei Leoni.209 In
        view of the Parties’ activities, these competitors are closer to Nuova Castelli as
        manufacturers of their own product, as opposed to Lactalis which does not have
        manufacturing activities for buffalo milk mozzarella and only trades.
206   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
207   Questionnaire to customers (Q2), question 78.2.
208   Questionnaire to customers (Q2), question 78.2.
209   Questionnaire to customers (Q2), questions 66 and 70.
                                                       32
 ---pagebreak--- (191)  In both branded and private label, the existence of a number of credible
       competitors offering volumes of buffalo milk mozzarella to retailers in Italy and
       competing in the negotiations organised by retailers is not only confirmed by
       qualitative descriptions of market interaction by such customers, but also
       confirmed by actual sourcing information. Data collected from retailers shows that
       a majority of them source from a relatively wide range of suppliers of buffalo cow
       milk mozzarella. In particular, the data shows that most retailers have sourced from
       one or more suppliers other than the Parties in 2018.210
(192)  Third, as outlined in Section 4.3.2, the market for the supply of buffalo milk
       mozzarella to retailers is a differentiated market across sales channels, where
       suppliers can compete in branded and in private label cheese. Although the
       presence of suppliers in the same sales channel will be indicative of closeness of
       competition between them, the pricing of private label products will have some
       effect on the pricing ability in the branded side of the market.
(193)  Beside the considerations concerning the structure and shares of the buffalo milk
       mozzarella market, the Commission considers that the Transaction does not raise
       serious doubts for the following reasons.
(194)  First, the Commission finds that retailers do not face significant barriers to
       switching across suppliers in Italy. The vast majority of the retailers who responded
       to the Commission’s requests for information stated that it is possible to switch to
       different suppliers of mozzarella.211 More importantly, most of these retailers noted
       that they have switched to a different supplier of any type of mozzarella over the
       past 3 years.212 This suggests that customer switching costs for private label supply
       of buffalo milk mozzarella in Italy are not significant. This also indicates that there
       are little barriers to switching across the fragmented range of viable suppliers of
       buffalo milk mozzarella in Italy.
(195)  Second, as regards barriers to entry, the market investigation suggested that a
       potential barrier could be the more limited availability of buffalo milk, which is
       scarcer than cow milk. However, and mainly in view of the range of players
       already active on the market, this is not regarded as particularly problematic by the
       Parties’ competitors as well as retailers responding on the issue of barriers to entry
       or expansion to the market of buffalo milk mozzarella in Italy.213
(196)  Third, and consistent with the above, Italian retailers responding to the market
       investigation generally did not express concerns as to the impact of the Transaction
       on the market for buffalo milk mozzarella in Italy. A majority of customers that
       expressed a view during the market investigation states that, post-Transaction,
       there will be no change with respect to the competitive conditions in relation to the
       supply of buffalo milk mozzarella.214
(197)  Finally, the Commission found that the Transaction does not raise serious doubts as
       to its compatibility with the internal market on the plausible market for branded
       buffalo milk mozzarella in Italy.
210   Questionnaire to customers (Q2), questions 66 and 70.
211   Questionnaire to customers (Q2), question 73.
212   Questionnaire to customers (Q2), question 72.
213   Questionnaire to competitors (Q1), question 88; Questionnaire to customers (Q2), question 78.
214   Questionnaire to customers (Q2), question 123. See also non-confidential version of minutes of a call
      with a strategic market participant, 22 July 2019.
                                                         33
 ---pagebreak--- (198)    In conclusion, in light of the above and based on the information available to the
         Commission and provided by Parties, the Commission considers that the
         Transaction does not raise serious doubts in the overall market for buffalo milk
         mozzarella in Italy.
5.4.3. Gorgonzola
(199)    Lactalis supplies both branded and private label Gorgonzola to retailers in Italy,
         whereas Nuova Castelli supplies branded Gorgonzola and very limited volumes of
         private label Gorgonzola.
       (A)        Branded gorgonzola in Italy
(200)    In the supply of branded Gorgonzola to retailers in Italy, the Parties have a
         combined Adjusted market share of [40-50]%, with a limited increment of [0-5]%.
(201)    First, as regards branded Gorgonzola, the Transaction results in an affected market
         only because of Lactalis’ large market presence with branded products, with strong
         and widely recognised brands of Gorgonzola, and in particular Galbani and Gim
         Invernizzi.215
(202)    Second, this is consistent with the fact that, in Italy, Nuova Castelli does not enjoy
         strong presence in Gorgonzola, in which Nuova Castelli is a much smaller player
         than Igor or Lactalis.216 Thus, the Transaction will bring a limited increment to
         Lactalis’ market share of [0-5]%.
(203)    Third, several other strong competitors of Lactalis are active in branded
         Gorgonzola, including Igor, the market leader, as well as Mauri, Biraghi and Bassi,
         all of them enjoying market shares in the overall Gorgonzola market similar to that
         of Nuova Castelli (see Table 3 below). Overall, the Parties’ competitors in the
         branded segment have a strong presence with important brands, which account for
         over [30-40]% of the overall Gorgonzola market in Italy (see Table 3 below).
(204)    Consistent with these Adjusted market shares, which point at a fragmented set of
         suppliers that are as large as or, even larger than Nuova Castelli in the branded
         segment, the market investigation supports the finding that a number of credible
         competitors can and do offer volumes of branded Gorgonzola to retailers in Italy
         and compete in the negotiations organised by retailers. Data collected from retailers
         show that a majority of them source from a relatively wide range of suppliers of
         branded Gorgonzola. In particular, the data shows that most retailers have sourced
         from one or more suppliers other than the Parties in 2018.217
(205)    The Commission has also considered in its assessment of this plausible market the
         arguments presented in the below section as regards the overall market, and in
         particular concerning the availability of other suppliers and the impact of the
         Transaction that also apply to the assessment of branded Gorgonzola.
(206)    In conclusion, in light of the above and based on the information available to the
         Commission and provided by Parties, the Commission finds that the Transaction
         does not raise serious doubts as to its compatibility with the internal market with
         regard to the plausible market of branded Gorgonzola in Italy.
215    The combined value market shares for branded segment are higher (by less than 7 percentage points)
       than the volume shares provided by the Parties, and both overstate the Parties’ position compared to
       panel data.
216    Non-confidential version of minutes of a call with a third party, 24 July 2019.
217    Questionnaire to customers (Q2), question 98.
                                                        34
 ---pagebreak---       (B)        Private label Gorgonzola in Italy
(207)   First, Nuova Castelli had very limited sales of private label Gorgonzola in Italy
        in 2018.
(208)   Second, in light of the above, the Transaction will bring a very limited increment to
        Lactalis’ market share ([0-5]% of the overall market, see Table 3 below) in relation
        to this segment in Italy, therefore it is unlikely to affect the existing structure of the
        market.
(209)   Third, the Commission observes that the private label segment of the market for
        Gorgonzola in Italy is rather fragmented and the production distributed among a
        number of producers throughout the PDO territory.
(210)   The Commission has also considered in its assessment of this plausible market the
        arguments presented in the below section as regards the overall market, and in
        particular concerning the availability of other suppliers and the impact of the
        Transaction that also apply to the assessment of private label Gorgonzola.
(211)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the plausible market of private label Gorgonzola in Italy.
      (C)        Overall market for gorgonzola in Italy
(212)   Based on the Commission’s methodology, Adjusted market shares for the overall
        market for Gorgonzola in Italy are as follows.
                                                 Table 3
                                      Italy 2018, Gorgonzola218
                     Branded and private label – Adjusted market shares
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]               [20-30]%
              Lactalis – private label                     […]                [5-10]%
              Nuova Castelli - branded                     […]                 [0-5]%
              Nuova Castelli – private label               […]                 [0-5]%
              Combined Parties PL + B                      […]               [30-40]%
              Igor                                         […]               [30-40]%
              Mauri Emilio                                 […]                 [0-5]%
              Biraghi                                      […]                 [0-5]%
              Bassi Spa                                    […]                 [0-5]%
              Others – private label                       […]               [30-40]%
              Total sales                                 6354                  100%
              Note: Internal branded sales were inserted for Nuova Castelli as there
              was no entry in the panel. The sales were reduced to match the
              unspecified branded difference in the panel.
218   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
                                                       35
 ---pagebreak--- (213)  First, as explained in Section 4.3.1.3(E), the market for Gorgonzola is strictly
       regulated by the Consorzio Gorgonzola PDO, on the overall market for branded
       and private label, the Commission observes that it is rather fragmented and the
       production is distributed throughout the PDO territory, which includes the
       10 provinces of Lombardy and 5 provinces in Piedmont.219
(214)  Moreover, Italy enjoys the presence of a number of alternative suppliers of both
       branded and private label Gorgonzola, namely – among others – Igor: [30-40]%;
       Emilio Mauri: [0-5]%; Biraghi: [0-5]%; Bassi SpA: [0-5]% (see Table 3 above).
(215)  Second, as outlined in Section 4.3.2, the market for the supply of Gorgonzola to
       retailers is a differentiated market across sales channels, where suppliers can
       compete in branded and in private label cheese. Although the presence of suppliers
       in the same sales channel will be indicative of closeness of competition between
       them, the pricing of private label products will have some effect on the pricing
       ability in the branded side of the market.
(216)  Beside the considerations concerning the structure and shares of the Gorgonzola
       market, the Commission considers that the Transaction does not raise serious
       doubts for the following reasons.
(217)  First, the Commission finds, based on the market investigation, that barriers to
       entry and expansion are not high for suppliers of Gorgonzola in Italy.
(218)  When market conditions are such that competitors have sufficient capacity and find
       it profitable to expand output sufficiently, the Commission is unlikely to find that
       the merger would significantly impede effective competition.220 Conversely, when
       market conditions are such that the competitors of the merged entity are unlikely to
       increase their supply significantly should prices increase, the merged entity may
       have an incentive to reduce output below the combined pre-merger levels thereby
       raising market prices.221
       (a)    From the demand side, the market investigation suggested that the majority
              of retailers respondents do not believe that there are barriers to entry or
              expansion in terms of cost and time.222
       (b)    From the supply side, the majority of market respondents indicated that the
              cost and time required to enter or expand production in Italy are not
              significant.223
(219)  The Commission therefore considers that alternative suppliers have sufficient
       capacity and incentives to expand the production volume, should the merged entity
       increase prices in Italy.
(220)  Second, as regards logistics and distributions, competitors and customers in Italy
       confirmed in the market investigation that distribution in the Italian territory is
       already fragmented and organised in a way that it is possible to distribute fresh
       products on the Italian territory without incurring on significant costs, even for
       smaller manufacturers.
219   Non-confidential version of minutes of a call with a third party, 24 July 2019.
220   Horizontal Merger Guidelines, paragraph 33.
221   Horizontal Merger Guidelines, paragraph 32
222   Questionnaire to customers (Q2), question 105.
223   Questionnaire to competitors (Q1), question 124.
                                                       36
 ---pagebreak--- (221)    Third, the Italian market is also characterised by low barriers to switching for the
         products mainly supplied by Lactali through Gim Invernizzi. While the branded
         position of Lactalis seems to command customer loyalty, the majority of the
         retailers who responded to the Commission’s requests for information stated that it
         is possible to switch to different suppliers of Gorgonzola. This indicates there is a
         dynamic and fragmented range of viable suppliers of Gorgonzola in Italy.
(222)    Fourth, with regard to the impact of the Transaction, a third party stated that the
         Transaction “will not have a negative impact on […] the overall market of
         Gorgonzola in Italy.”224 Furthermore, the same third party described Nuova
         Castelli as a company “rather small when it comes to Gorgonzola.”225
(223)    Moreover, the majority of responsive retailers in Italy held the view                   that there will
         be no change post-Transaction with respect to the competitive                            conditions in
         relation to the supply of Gorgonzola.226 Moreover, the majority                         of responsive
         retailers in Italy believe that the Transaction will have no impact on                  the market or
         on their companies.227
(224)    Finally, the Commission found that the Transaction does not raise serious doubts as
         to its compatibility with the internal market on the plausible market for branded
         Gorgonzola as well as private label Gorgonzola.
(225)    Based on the above considerations and in light of the results of the market
         investigation, the Commission considers that the concentration does not raise
         serious doubts as to its compatibility with the internal market as regards the overall
         market for Gorgonzola in Italy.
5.4.4. Ricotta
(226)    Lactalis and Nuova Castelli are active in the market for ricotta in Italy. Both Parties
         manufacture and sell branded and private label ricotta.
       (A)        Branded ricotta in Italy
(227)    For branded ricotta, the combined Adjusted market share of the Parties in 2018 in
         Italy was [60-70]% (in volume), with a limited increment of [0-5]% in view of
         Nuova Castelli’s limited brand presence. 228
(228)    First, Nuova Castelli had limited sales of branded ricotta in Italy in 2018. The
         Transaction will bring a limited increment to Lactalis’ market share of [0-5]%.
         Moreover, Nuova Castelli does not enjoy strong brand presence.
(229)    Second, after the Transaction, the merged entity will continue to face significant
         competitive pressure from the strongest branded competitor to Lactalis, Granarolo.
         According to the data provided by the Parties and based on the Commission’s
         analysis (see Section 5.2 above), in 2018 Granarolo represented a stronger
         competitive constraint than Nuova Castelli with regard to branded ricotta in Italy.
224    Courtesy translation from Italian: “…non ritiene che l’Acquisizione avra’ un impatto negativo […]
       sul mercato del Gorgonzola”, Non-confidential version of minutes of a call with a third party,
       24 July 2019.
225    Courtesy translation from Italian: “…ma una piccola impresa per quanto riguarda il gorgonzola”,
       Non-confidential version of minutes of a call with a third party, 24 July 2019.
226    Questionnaire to customers (Q2), question 123.
227    Questionnaire to customers (Q2), question 125.
228    The combined value market shares for branded segment are in line with the volume shares provided
       by the Parties, but both still slightly overstate the Parties’ position compared to panel data.
                                                            37
 ---pagebreak---         Granarolo’s recorded sales of branded ricotta were five times higher than Nuova
        Castelli’s sales and accounted for [5-10]% of the overall ricotta market in Italy (see
        Table 4 below).
(230)   Third, the merged entity will also continue to face significant competitive
        constraints from three other branded suppliers (Caseificio Elda, Campo Dei Fiori
        and Caseificio Sabelli) which in 2018 had individual sales of branded ricotta
        comparable to those of Nuova Castelli. Moreover, several additional smaller
        suppliers of branded ricotta will remain in the Italian market post-Transaction.
        These suppliers accounted for [10-20]% of the overall market for ricotta in Italy
        in 2018 (see Table 4 below).
(231)   Fourth, with regard to the ability of customers to switch suppliers of ricotta, the
        majority of customers that responded to the market investigation considered they
        could not quickly switch to an alternative supplier of branded ricotta with a
        comparable range and sufficient quantities;229 however, the majority of responsive
        competitors and customers that expressed a view indicated that it was possible and
        even easy to switch suppliers of ricotta.230
(232)   Finally, the Commission has also considered in its assessment of this plausible
        market the arguments presented in the below section as regards the overall market,
        and in particular concerning the absence of significant barriers to entry and
        expansion, the availability of other suppliers and the impact of the Transaction that
        also apply to the assessment of branded ricotta.
(233)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the plausible market of branded ricotta in Italy.
      (B)        Private label ricotta in Italy
(234)   First, both Parties have moderate sales of private label ricotta in Italy in 2018 and
        the combined market share remains modest, slightly above [20-30]%. The
        combined market share of the Parties in 2018 in Italy was [20-30]% (in volume),
        with a moderate increment of [5-10]%.
(235)   Second, after the Transaction, the merged entity will continue to face significant
        competitive pressure from several suppliers of private label ricotta that in 2018
        accounted for more than […] tons of private label ricotta sold in Italy
        (i.e. [30-40]% of the overall market, see Table 4 below). These suppliers will
        continue to exercise competitive pressure on the merged entity after the
        Transaction.
(236)   Third, with regard to the ability of customers to switch suppliers of ricotta, half of
        the responsive customers that expressed a view indicated that they could quickly
        switch to an alternative supplier of private label ricotta with a comparable range
        and sufficient quantities.231
(237)   Finally, the Commission has also considered in its assessment of this plausible
        market the arguments presented in the below section as regards the overall market,
        and in particular concerning the absence of significant barriers to entry and
229   Questionnaire to customers (Q2), question 84.1.
230   Questionnaire to competitors (Q1), question 100; Questionnaire to customers (Q2), question 83.
231   Questionnaire to customers (Q2), question 84.2.
                                                      38
 ---pagebreak---         expansion, the availability of other suppliers and the impact of the Transaction that
        also apply to the assessment of private label ricotta.
(238)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the plausible market of private label ricotta in Italy.
      (C)        Overall market for ricotta in Italy
(239)   Based on the Commission’s methodology, Adjusted market shares for the overall
        market for ricotta in Italy are as follows.
                                                 Table 4
                                          Italy 2018, Ricotta232
                     Branded and private label – Adjusted market shares
              Competitor                               Sales, tons       Market Share
              Lactalis - branded                           […]               [30-40]%
              Lactalis – private label                     […]                [5-10]%
              Nuova Castelli - branded                     […]                 [0-5]%
              Nuova Castelli – private label               […]                 [0-5]%
              Combined Parties PL + B                      […]               [40-50]%
              Granarolo                                    […]                [5-10]%
              Caseificio Elda Snc                          […]                 [0-5]%
              Campo Dei Fiori                              […]                 [0-5]%
              Caseificio Sabelli                           […]                 [0-5]%
              Others - branded                             […]               [10-20]%
              Others – private label                       […]               [30-40]%
              Total sales                                25 125                 100%
              Note: Internal branded sales were inserted for Nuova Castelli as there
              was no entry in the panel.
(240)   The Transaction results in an affected market because of Lactalis’ large market
        presence with branded products, with strong and widely recognised brands, such as
        Galbani. Nuova Castelli has a more limited presence in the overall market for
        ricotta in Italy, bringing a moderate increment of [0-5]%.
(241)   Beside the considerations concerning the shares of the market for ricotta in Italy,
        the Commission considers that the Transaction does not raise serious doubts for the
        following reasons.
(242)   First, after the Transaction, the merged entity will continue to face significant
        competitive pressure from Granarolo as well as from more than three branded and
        private label competitors, which accounted for [50-60]% of the overall market for
232   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
                                                       39
 ---pagebreak---        ricotta in Italy (see Table 4 above). These competitors are likely to continue
       exercising competitive pressure on the merged entity comparable to the pressure
       exercised by Nuova Castelli on Lactalis pre-Transaction.
(243)  Second, with regard to the ability of customers to switch suppliers of ricotta, while
       the majority of customers that responded to the market investigation had not
       switched suppliers of branded or private label ricotta in the last three years,233 the
       majority of responsive competitors and customers that expressed a view indicated
       that it was possible and even easy to switch suppliers of ricotta.234
(244)  Third, concerning barriers to entry and expansion, different from other fresh cheese
       products discussed above for which access to milk has been assessed as a potential
       barrier to entry, ricotta is produced from a by-product of other cheese production.
       In particular, as explained by the Notifying Party, ricotta is manufactured by
       heating whey to 80° C. The market investigation confirmed that ricotta is by-
       product of whey,235 which is a liquid derived from the production of soft and fresh
       cheese (e.g. mozzarella)236 . The Parties use their leftovers of whey to produce
       ricotta as well as milk powder. Nuova Castelli also sells part of its whey to third
       parties.
(245)  Moreover, the market investigation also indicated that (i) there has been at least
       one entrant in the market for ricotta in Italy in the last 5 years, Valcolatte;237 and
       (ii) two Italian competitors indicated that they could substantially increase their
       production of ricotta without incurring in significant additional costs.238 In
       addition, the majority of customers that responded to the market investigation
       indicated that there were not significant barriers to entry or expansion for ricotta in
       terms of costs and time. 239
(246)  Fourth, the majority of the Italian competitors and customers that responded to the
       market investigation indicated that the Transaction will not have impact on prices
       for the supply of ricotta in their countries.240 Moreover, a competitor indicated that
       it expected prices for ricotta to decrease in Italy.241
(247)  Fifth, the Commission found that the Transaction does not raise serious doubts as
       to its compatibility with the internal market on the plausible markets for branded
       ricotta in Italy as well as private label ricotta in Italy.
(248)  In conclusion, in light of the above and based on the information available to the
       Commission and provided by Parties, the Commission considers that the
       Transaction does not raise serious doubts in the overall market for ricotta in Italy.
233   Questionnaire to customers (Q2), questions 81 and 82.
234   Questionnaire to competitors (Q1), question 100; Questionnaire to customers (Q2), question 83.
235   Questionnaire to competitors (Q1), question 15.
236   Questionnaire to competitors (Q1), question 15.1.
237   Questionnaire to competitors (Q1), questions 101 and 101.1.
238   Questionnaire to competitors (Q1), question 102.1.
239   Questionnaire to customers (Q2), question 87.
240   Questionnaire to customers (Q2), question 124; Questionnaire to competitors (Q1), question 104.
241   Questionnaire to competitors (Q1), question 104.
                                                       40
 ---pagebreak--- 5.4.5. Milk procurement
(249)   Lactalis only procures cow milk in Italy, and does not procure buffalo nor sheep
        milk there. Conversely Nuova Castelli procures cow milk, buffalo milk and sheep
        milk in Italy.242
(250)   For conventional cow milk, the market share of the Parties in 2018 for procurement
        of raw and pasteurised cow milk in Italy was below [10-20]%, with a limited
        increment of approximately [0-5]%.243
        (a)    For conventional cow raw milk, the market share of the Parties in 2018 for
               procurement of conventional raw cow milk in Italy was [10-20]%, with a
               limited increment of [0-5]%.244
        (b)    For conventional pasteurised cow milk, the market share of the Parties in
               2018 for procurement of conventional cow pasteurised milk in Italy was
               [10-20]%, with a negligible increment of [0-5]%.245
(251)   For completeness, the Commission notes that the market share of the Parties
        in 2018 for procurement of conventional cow raw milk in Italy was [30-40]% in
        Lazio, with a negligible increment of less than [0-5]%; and [50-60]% in Sicily,
        with a moderate increment of [0-5]%.246
(252)   With regard to Sicily, the milk collected by Lactalis in Sicily is only for fresh milk
        consumption, and not for cheese production. Nuova Castelli is not present as such
        in Sicily but procures indirectly milk that is collected in Sicily for its production
        plants located in […] and in […]. Limiting the market for the procurement of milk
        from farmers (excluding traded milk) would entail that there is no overlap in Sicily.
        The overlap exists only when assessing a market that includes milk from Sicily that
        is traded. In any event, the increment is minimal.247
(253)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the market of milk procurement in Italy.
5.5.   France
(254)   Based on the market share data submitted by the Parties and in light of the
        methodology used (see Section 6.3), the Transaction gives rise to the following
        horizontally affected markets in France: Cow milk mozzarella (Section 5.5.1);
        buffalo milk mozzarella (Section 5.5.2); ricotta (Section 5.5.3); mascarpone
        (Section 5.5.4); Gorgonzola (Section 5.5.5); Feta (Section 5.5.6); Italian-type hard
        cheese (Section 5.5.7) and other affected markets (Section 5.5.8).
5.5.1. Cow milk mozzarella
(255)   Lactalis and Nuova Castelli are active in the market for cow milk mozzarella in
        France. Both Parties sell branded and private label cow milk mozzarella.
242    Form CO,  paragraph 435.
243    Form CO,  paragraph 436.
244    Form CO,  paragraph 436.
245    Form CO,  paragraph 436.
246    Form CO,  paragraph 441.
247    Form CO,  paragraph 444.
                                                 41
 ---pagebreak--- (256)   In view of the fact that in France both Parties sell branded and private label cow
        milk mozzarella, the Commission also considered the impact of the Transaction on
        the market structure for the supply of branded products, and for the supply of
        private label products, as well as the impact on the overall market.
      (A)        Branded cow milk mozzarella
(257)   Focusing on branded products only the combined Adjusted market share would be
        [40-50]% (Lactalis: [40-50]%; Nuova Castelli: [0-5]%).248 Although the Parties’
        combined shares in the branded segment are high, these are largely due to the very
        high share of Lactalis, which is active on the market through a brand which is
        consistently referred to as the strongest, and in many cases as a 'must have' brand
        by retailers. However, the increment from Nuova Castelli is modest.
(258)   The market investigation confirmed the submission by the Notifying Party that
        Nuova Castelli specializes in the supply of private labels, its brands are little
        known, whereas Lactalis specializes in the supply of branded products with well-
        known brands. In particular, multiple retailers confirmed that the Nuova Castelli
        brand enjoys little to none brand awareness: ‘On the French market the Castelli
        brand enjoys little to none brand awarness'’249 , ‘Galbani enjoys a far superior
        brand awareness that Castelli which is not know in France as a brand.’;250 and
        ‘The Nuova Castelli brand (Alival) has little relevance for the consumer compared
        to Lactalis brand (Santa Lucia and Vallelata)’. This is reflected in the small
        increment of [0-5]% brought by Nuova Castelli.
(259)   As regards closeness of competition, the market investigation points at the fact that
        Nuova Castelli and Lactalis are not closely competing in the branded product
        market. There are bigger competitors such as Granarolo which is active both with a
        strong brand as further developed in paragraph (260) and in private label. There are
        also alternative similar sized players as Nuova Castelli such as Ambrosi, which,
        similarly, do not have a strong brand but are present with limited sales in the
        branded cow milk mozzarella segment. On the specific question of closeness,
        Nuova Castelli is not seen as a real competitor to Lactalis. As an illustration,
        retailers indicated that Galbani and Nuova Castelli are not close competitors: ‘They
        are not close competitors in our opinion. Castelli is rather in competition with
        Granarolo or Ambrosi.’251 confirming that the competitive pressure exerted on
        Lactalis by Nuova Castelli brand is currently very limited.
(260)   The market investigation further confirmed the presence of stronger brands than
        Nuova Castelli as competing closer with Lactalis. In particular, there are better-
        known brands such as Casa Azzurra of Granarolo which is confirmed by market
        investigation. When asked for the strongest brands, the retailers cited most often
248   The combined value market shares for branded segment are higher (by 5 percentage points) than the
      volume shares provided by the Parties, and both overstate the Parties’ position compared to panel
      data.
249   Courtesy translation from French: " La marque Castelli est sur le marché français confidentielle",
      Questionnaire to customers (Q2), question 59.
250   Courtesy translation from French: "Galbani a une notoriété bien supérieure à celle de Castelli qui
      n'est pas connu en France en Marque Nationale", Questionnaire to customers (Q2), question 67.1.
251   Courtesy translation from French: "Ce ne sont pas de réels concurrents pour nous. Castelli est plutôt
      en concurrence avec des fournisseurs comme Granarolo ou Ambrosi."; Questionnaire to customers
      (Q2), question 67.1.
                                                     42
 ---pagebreak---         Galbani (Lactalis), followed by Casa Azzurra (Granarolo) and Ambrosi (Ambrosi),
        Nuova Castelli is never cited252 .
(261)   The Commission has also considered in its assessment that the arguments presented
        in the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion, the availability of other
        suppliers, evidence of switching and lack of barriers to switching with respect to
        this plausible market also apply to the assessment of branded cow milk mozzarella.
(262)   In view of the above, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        branded cow milk mozzarella in France.
      (B)       Private label cow milk mozzarella
(263)   Considering the private label procurement segment and using downstream market
        share at retail level as a proxy to estimate market shares at procurement level the
        Parties have [60-70]% combined share of supply in volume (Lactalis: [40-50]%;
        Nuova Castelli: [20-30]%).
(264)   In France, more than half of the cow milk mozzarella market is private label
        ([50-60]%).253 All biggest retailers in France carry their own private label
        products254 . Most of them also offer different qualities ranging from low-tier
        (“premier prix”) to conventional, organic or high-end private label mozzarella.255
(265)   For the private label procurement market, using downstream market share at retail
        level as a proxy to estimate market shares at procurement level, the increment
        brought by Nuova Castelli is more significant, with Nuova Castelli adding
        [20-30]% to Lactalis [40-50]% market share considering 2018 figures.
(266)   The Commission has also considered in its assessment that the arguments presented
        in the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion, the availability of other
        suppliers, and evidence of switching / lack of barriers to switching with respect to
        this plausible market also apply to the assessment of private label cow milk
        mozzarella in France.
(267)   In view of the above, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        private label cow milk mozzarella in France.
      (C)       Overall market for cow milk mozzarella in France
(268)   Both Lactalis and Nuova Castelli supply branded and private label cow milk
        mozzarella in France. Lactalis is the largest supplier of branded and of private label
        cow milk mozzarella. Nuova Castelli is the second largest private label supplier,
        and has significantly lower volumes in branded segment. As outlined by the
        Adjusted market shares, most of the overlap between the Parties in cow milk
        mozzarella in France occurs in the private label market for the supply of cow milk
        mozzarella to retailers in France. Based on the market share data submitted by the
        Parties and in light of the methodology described in Section 5.2, the combined
252   Questionnaire to customers (Q2), question 50.
253   Based on panel data, Parties’ response to Commission’s request for information RFI 23.
254   Questionnaire to customers (Q2), question 4.1.
255   Questionnaire to customers (Q2), question 5.1.
                                                      43
 ---pagebreak---         Adjusted market shares in branded and private of the Parties in volume terms
        in 2018 were: [50-60]% (Lactalis: [40-50]%; Nuova Castelli: [10-20]%).
                                                     Table 5
                               France 2018, Cow milk mozzarella256
                     Branded and private label – Adjusted market shares
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]               [10-20]%
              Lactalis private label                       […]               [20-30]%
              Nuova Castelli - branded                     […]                 [0-5]%
              Nuova Castelli – private label               […]               [10-20]%
              Combined Parties PL + B                      […]               [50-60]%
              Granarolo                                    […]                [5-10]%
              Ambrosi                                      […]                 [0-5]%
              Others - branded                             […]               [10-20]%
              Others – private label                       […]               [10-20]%
              Total sales                                 25373                 100%
(269)   Overall, during the market investigation a majority of customers in the French
        market expressing their views expressed concerns about the possible impact of the
        Transaction on prices for Italian-type cheeses, and in particular in view of the loss
        of a competitor on the cow milk mozzarella market.
(270)   Beside the considerations concerning the concentration of the competitive
        landscape and shares of the market for cow milk mozzarella in France, the
        Commission considers that the Transaction does not raise serious doubts, as to its
        compatibility with the internal market on the overall market for cow milk
        mozzarella in France, for the reasons highlighted below.
(271)   First, as explained above, the Parties are not close competitors on the branded
        segment as Lactalis is active on branded cow milk mozzarella in particular through
        its flagship and widely recognised brand Galbani in France. Conversely, Nuova
        Castelli does not enjoy strong brand presence in cow milk mozzarella, but focuses
        primarily on private label supplies of this product to retailers.
(272)   The only element of differentiation on which the companies may be identified as
        close competitors in the private label market in France by some retailers concerns
        the fact both companies have facilities in Italy and can respond to tenders for 'made
        in Italy' mozzarella. Out of all respondents which expressed a view half of them do
        not consider that this was an important criteria and the other half does257 .
256   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
257   Questionnaire to customers (Q2), question 63.1.
                                                       44
 ---pagebreak--- (273)   For example, a retailer submitted: ‘To have mozzarella "made in Italy" is important
        to compete on the premium market […] 258 ’; another one explained ‘It is an Italian
        typical product for it to be made in Italy is a clear advantage.’259 On the other
        hand, this view is not shared by a number of retailers, which do not seem to
        consider this criteria as critical: ‘The made in Italy label is not important on cow
        milk mozzarella’.260
(274)   However, the assessment of the tender behaviour show that a large majority of the
        French retailers that replied to the market investigation are sourcing both made in
        Italy and non-made in Italy cow milk mozzarella261 .
(275)   The Parties also provided evidence that even when a tender is specifically issued
        for made in Italy cow milk mozzarella, there is still competition and price pressure
        from suppliers of cow milk mozzarella not produced in Italy. As an example, the
        Parties provided evidence that even tenders issued for made in Italy mozzarella
        may ultimately result in the selection of a German manufacturer for price
        considerations.262
(276)   This is consistent with the overall data on import trends of mozzarella. On a
        national basis the evolution of imports of mozzarella in various Member States
        shows that, in France, the share of Italian imports fell from 60 to 56 % from 2015
        to 2018, while the share of mozzarella manufactured in Germany’s gained 11
        points between 2016 and 2018.263
(277)   All these elements further suggest that mozzarellas from different origins are
        substitutable to some extent from the point of view of retailers and end-consumers.
(278)   Second, the Commission's finding confirms that there is a number of other players
        with manufacturing facilities in Italy capable to supply the French market.
(279)   Market investigation data shows that at least 4 Italian based companies other than
        the Parties actively supply retailers. The other Italian based companies actively
        supplying retailers are described by the Parties as follows:
        (a)     Granarolo is one of the leading groups on the Italian fresh cheese markets.
                It runs 14 plants in Italy and 7 abroad. Active both in branded cow
                mozzarella through the Casa Azzurra brand and private label. Granarolo
                exports cheese in 35 European countries through 2 large commercial hubs
                in France and in the UK.
        (b)     Ambrosi, exports part of its production to France, Germany, USA and
                Japan. It has a distribution company in France (ETS Schöpfer SAS);
        (c)     Zanetti is active in the supply of cow milk mozzarella, ricotta, mascarpone
                and Gorgonzola, both in France and the UK. Zanetti works with Disgroup
                which is an external service provider engaged in the provision of logistics
258   Questionnaire to customers (Q2), question 63.1.
259   Courtesy translation from French: "C’est un produit typique et le made in italy offre un avantage
      certain",Questionnaire to customers (Q2), question 63.1.
260   Courtesy translation from French: "Le "made in Italy" n'est pas important sur la mozzarella de
      vache", Questionnaire to customers (Q2), question 63.1.
261   Questionnaire to customers (Q2b), question 9.
262   Form CO, paragraph 215.
263   Form CO, paragraph 232.
                                                      45
 ---pagebreak---                    and delivery services active in France. Zanetti outsources at least part of its
                   distribution in particular in France;
          (d)      Sabelli identifies itself as “one of the most important players in the
                   Mozzarella market”.264 Its focus is mainly on export, especially to the
                   French market. In 2016, it acquired Trevisanalat.
(280)     The market investigation also points to a number of other alternative suppliers.
          When asked for available viable alternatives, the respondents pointed at a number
          of suppliers, such as Alliance Eurofood, Zott, Jager, Bayernland, Colla, Rivaldi,
          Morsillo, and Valcolatte.265
(281)     Moreover, the limited market power of Lactalis and Nuova Castelli in private label
          can be illustrated by the fact that Nuova Castelli lost important private label cow
          milk mozzarella sales volumes with retailers while Lactalis captured only part of
          these quantities. As seen in the graph below, in 2019 Nuova Castelli lost significant
          volumes of private label cow milk mozzarella with […], […], and […].266 As
         regards […], the graph shows that Lactalis’ volumes to […] have significantly
         increased and likely substituted the volumes previously supplied by Nuova Castelli.
         Given that Lactalis did not increase their private label sales at […] and […], it is
         likely that these volumes were attributed to other suppliers. However, it is to be
         noted that a large share of the volumes lost by Nuova Castelli concerns […].267
   Figure 2 – [Figure comparing the parties’ sales volumes in the first nine months of
  2019 compared to their sales volumes in the first nine months of 2018, by customer].
                                                   […]
                                                Source: […]
(282)     As explained by the Parties: “The parties’ market share decreased by […].”268
         Most importantly this provides a strong indication that there are alternative
         suppliers.
(283)     This evolution underlines that French retailers can find alternative suppliers to
         produce their private label cow milk mozzarella. Since January 2018, there has
         been a substitution away from Nuova Castelli which only partially shifted towards
         Lactalis, confirming that there are available alternatives as evidenced in the graph
         below.
 Figure 3 – [Figure showing the evolution of the parties’ market shares on the market
                for the supply of private label cow milk mozzarella in France]
                                                   […]
                                                Source: […]
(284)     Third, the competition for the supply of private label products to retailers takes
          place through tenders, which are generally organised yearly.
264     http://www.grupposabelli.it/il-gruppo.php.
265    Questionnaire to customers (Q2), question 70.
266    Parties’ submission “Briefing Memorandum No 3”, dated 20.11.2019.
267    Form CO, paragraph 360.
268    Parties’ submission “Briefing Memorandum No 3”, dated 20.11.2019
                                                        46
 ---pagebreak--- (285)   Retailers usually issue tender for different types of cow milk mozzarella
        (e.g. mozzarella in brine 125 g, mozzarella in brine 250g, dry mozzarella 400g,
        organic mozzarella) and indicate the volumes required for each of these categories.
        Market investigation indicate that retailers issue multiple tenders depending on
        packaging, weight, specificities (e.g., first price, organic) with requested volumes
        ranging from less than 25 tons to almost 1000 tons depending on the type of
        product.269
(286)   Based on the information provided by retailers on participants in tender procedures,
        it also regularly happens that private label tenders in France are allocated among
        different suppliers.
(287)   Suppliers answer calls for tenders, and the selection of suppliers is carried out on a
        reference by reference basis. A supplier might win a tender for a given format or
        packaging (e.g. for mozzarella in brine 125g) and another supplier for another
        format of mozzarella. Therefore, when participating in a tender, suppliers offer
        their best price for each individual reference.
(288)   Fourth, according to Lactalis, ‘any competitor with sufficient production capacity
        must be regarded as a significant competitive constraint for the Parties on the
        French market since logistics and distribution cannot be considered as a barrier to
        entry or expansion’270 .
(289)   Lactalis submitted, in particular, that (i) Granarolo and Savencia distribute their
        products in France using in-house/subsidiary assets, (ii) Emi and Ambrosi
        distribute in France through their own joint venture (Diprola, France) and (iii) eight
        other competitors outsource (at least) their transportation services in France.271
(290)   In the course of its market investigation, the Commission assessed whether
        distribution and logistics could be considered as a significant barrier to entry in
        France. While a number of suppliers considered distribution and logistics as a
        barrier to entry in France272 or as a competitive advantage for companies who own
        their own distribution platforms273 , the Commission was ultimately able, on the
        basis of distribution patterns of many existing and potential suppliers, to establish
        that there exists a sufficient number of suppliers with a viable route to market to
        distribute their products.
(291)   While some market participants mentioned logistics as a barrier to entry analysing
        the current structure of the supply market, a significant amount of suppliers do rely
        on outsourcing for their distribution and logistics. In France, the majority of
        suppliers that responded to the market investigation fully or partially outsourced
        their distribution process, while only 2 respondents did their distribution fully in-
        house. 274
(292)   Lactalis identified nine providers of transportation services (including refrigerated
        transportation) and nine providers of warehousing services for fresh food that
        operated in France and provided these services on a non-exclusive basis275 .
269   Questionnaire to customers (Q2b), question 9.
270   Form CO, paragraph 993.
271   Parties’ submission “Briefing M emorandum No 1”, dated 17.10.2019.
272   Questionnaire to competitors (Q1b), question 16.
273   Questionnaire to competitors (Q1b), question 16.1.
274   Questionnaire to competitors (Q1b), question 17.
275   The Parties submissions “Briefing Memorandum No 1” dated 17.10.2019.
                                                         47
 ---pagebreak--- (293)   Finally, the majority of suppliers use wholesale agreements, “groupage” and/or
        joint distribution agreements as part of their distribution strategy in several
        countries including France.276
(294)   From the retailer’s perspective, according to the Notifying Party, four retailers have
        developed so-called “consolidation warehouses” to minimise the number of
        delivery points for the suppliers. In France, according to the Notifying Party
        8 customer delivery locations account for 60% of the market.277
(295)   The market investigation confirmed that several French retailers have warehouses
        or consolidation warehouses to which the suppliers deliver the products and from
        which the retailers distribute to their network of stores278 .
(296)   Accordingly, the results of the market investigation suggest that suppliers of
        Italian-type cheeses are able to distribute their products in France through third
        parties (outsourcing).
(297)   Even if owning logistics assets in France, in some cases, seems to provide a
        competitive advantage, following the Transaction, at least four other suppliers will
        own distribution/logistics assets in France, besides the Parties279 : Granarolo,
        Savencia, the joint venture of Emi and Ambrosi (Diprola), and Zanetti. These
        companies active amongst others on the market for cow mozzarella, are likely to be
        able to exercise significant competitive pressure on the Parties in France.
(298)   Fifth, there have been recent new entrants in the cow milk mozzarella market in
        France. Namely Giovanni Ferrari entered the French market in 2011, mainly with
        hard cheeses and started producing mozzarella in 2019 while previously specialised
        in the production of Parmigiano Reggiano. Although this company remains a
        family owned business, Savencia Fromage & Dairy holds a 49% shareholding in
        Giovanni Ferrari. Savencia is a French publicly listed dairy company active
        worldwide.
(299)   In 2019, Giovanni Ferrari started selling branded cow-milk mozzarella in France.
(300)   On the supply side, existing players are increasing their production capacity to
        accompany the growth of mozzarella consumption in the EEA.
(301)   According to the Parties the following competitors have made investments in
        mozzarella production280 :
        (a)     Granarolo recently invested to increase the production capacity of its
                mozzarella plant in Usmate (Italy);
        (b)     Valcolatte recently acquired a new line for the production of mozzarella
                cubes;
        (c)     Bayerland recently acquired three lines for the production of mozzarella
                cubes.
        (d)     In July 2018, Glanbia announced setting up an entire new plant in Portlaoise
                (Ireland) and investing EUR 130 million for this project. The new plant is
                expected to start the production in 2020, with a capacity of 45,000 tons per
276   Questionnaire to competitors (Q1b), question 21.
277   Form CO, paragraph 941.
278   Questionnaire to customers (Q2b), question 13.
279   Parties’ submission “Briefing M emorandum No 1”, dated 17.10.2019.
280   Form CO, paragraphs 1043 to 1045.
                                                         48
 ---pagebreak---                annum; (as an indicative comparison panel data for sales of cow milk
               mozzarella in France estimated the market size to be 25 373 tons as reported
               in Table 5)
        (e)    In April 2018, Berglandmilch announced its decision to invest
               EUR 17.5 million to open a new plant in Aschabch (Austria). The plant is
               planned to produce mozzarella in 3 shifts on 6 days, to be able to produce
               20,000 tons of Mozzarella per annum;
        (f)    In November 2017, BMI announced setting up a new plant in Jessen
               (Germany) which is expected to expand the company’s production capacity
               by around 2.5 tons per hour;
        (g)    In July 2017, DMK announced that it invested EUR 15 million in its
               Nordhackstedt plant to be able to provide Arla with 35,000 tons of
               mozzarella each year. Nordhackstedt site has a capacity of approx.
               70,000 tons, of which half is dedicated to mozzarella. The aim with this
               investment is convert the site into a pure mozzarella plant (and thus double
               its production) by 2020.
(302)   The market investigation suggested low barriers to switching, and provided
        evidence that customers appear to be able to switch suppliers. As mentioned in
        paragraphs (281) to (283) Nuova Castelli lost important private label cow milk
        mozzarella sales volumes with retailers and Lactalis captured only part of these
        quantities. This tends to show that retailers have other sources of supply for their
        private label products than Nuova Castelli and Lactalis.
(303)   A majority of retailers expressing views submitted that they have not switched their
        private label supplier in the last 3 years281 . However, there were several instances
        where retailers indicated that they have switched suppliers, either by awarding a
        low-tier segment to a German supplier, or by contacting alternative suppliers,
        which are already present on the market282 .
(304)   The retailers confirm that they have the ability to switch between suppliers with the
        majority of French retailers expressing views submitting that they have three or
        more than three viable suppliers of private label cow milk mozzarella at any given
        time283 .
(305)   […].
(306)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission considers that the
        Transaction does not raise serious doubts in the market for cow milk mozzarella in
        France under any plausible product market definition.
5.5.2. Buffalo milk mozzarella
(307)   Lactalis supplies only branded buffalo milk mozzarella, whereas Nuova Castelli
        supplies private label buffalo milk mozzarella in France.
281    Questionnaire to customers (Q2), question 72.
282    Questionnaire to customers (Q2), question 72.1.
283    Questionnaire to customers (Q2b), question 10.
                                                       49
 ---pagebreak---       (A)        Branded buffalo milk mozzarella in France
(308)   For branded buffalo milk mozzarella the combined Adjusted market share of the
        Parties in 2018 in France was [20-30]% (in volume), with Nuova Castelli adding an
        increment of [0-5]% to Lactalis’ [20-30]% market share.284
(309)   First, Nuova Castelli had limited sales of branded buffalo milk mozzarella in
        France in 2018 and thus does not enjoy strong brand presence.
(310)   Second, after the Transaction, the merged entity will continue to face significant
        competitive pressure from the strongest competitor to Lactalis, Granarolo.
        According to the data provided by the Parties and based on the Commission’s
        analysis (see Section 5.2), in 2018 Granarolo represented a stronger competitive
        constraint than Nuova Castelli with regard to branded buffalo milk mozzarella in
        France. Granarolo’s sales of branded buffalo milk mozzarella were significantly
        higher than Lactalis’ and Nuova Castelli’s sales and accounted for [10-20]% of the
        overall buffalo milk mozzarella market in France.
(311)   Third, the merged entity will also continue to face significant competitive
        constraints from other branded suppliers which in 2018 had combined sales of
        branded buffalo milk mozzarella that accounted for [20-30]% of the overall buffalo
        milk mozzarella market in France.
(312)   The Commission has also considered in its assessment that the arguments presented
        in the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion and the availability of other
        suppliers with respect to this plausible market also apply to the assessment of
        branded buffalo milk mozzarella in France.
(313)   In view of the above, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        branded buffalo milk mozzarella in France.
      (B)        Overall market of buffalo milk mozzarella in France
(314)   Based on the market share data submitted by the Parties and in light of the
        methodology described in Section 5.2, the combined market shares of the Parties in
        branded and private label in volume terms in 2018 were: [50-60]% (Lactalis:
        [10-20]%; Nuova Castelli: [40-50]%).
284   The combined value market shares for branded segment are higher (by less than 5 percentage points)
      than the volume shares provided by the Parties, and both overestimate the Parties’ position compared
      to panel data.
                                                      50
 ---pagebreak---                                                      Table 6
                              France 2018, Buffalo milk mozzarella285
                     Branded and private label – Adjusted market shares
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]               [10-20]%
              Nuova Castelli - branded                     […]                [0-5]%
              Nuova Castelli – private label               […]               [40-50]%
              Combined Parties PL + B                      […]               [50-60]%
              Granarolo                                    […]               [10-20]%
              Ambrosi                                      […]                [0-5]%
              Others - branded                             […]               [20-30]%
              Others – private label                       […]                [0-5]%
              Total sales                                 5338                 100%
              Note: Parties private sales higher than the total of private label. They
              were reduced proportionally to match all private label sales recorded.
(315)   The Parties' activities in relation to buffalo milk mozzarella in France give rise to
        an affected market if the overall market including branded and private label was
        considered. Although, post-Transaction the Parties will have large combined
        market shares, the Commission considers that the concentration does not raise
        serious doubts for the supply of buffalo milk mozzarella in France for the following
        reasons.
(316)   First, there are several strong competitors already supplying the retailers in France.
(317)   As can be seen from the market structure in the Table provided above, in France,
        branded buffalo milk mozzarella covers a significant share of demand (more than
        [50-60]%). There are other players in the branded segment. For example, sales of
        Granarolo exceed Lactalis’ sales significantly and it exerts a much more significant
        competitive constraint than Nuova Castelli, which has very limited sales in the
        branded segment.
(318)   As regards the private label segment, Nuova Castelli is likely the largest supplier of
        private label buffalo milk mozzarella. However, based on the data provided by the
        Parties, other important suppliers of private label buffalo milk mozzarella are
        Granarolo with an estimated market share of [10-20]%; Caseificio Principe
        ([5-10]%), Spinosa ([0-5]%) and Ambrosi ([0-5]%) in the overall market of
        branded and private label goods combined.
(319)   Second, the Commission considers that the Parties are not close competitors for the
        supply of buffalo milk mozzarella in France. The Commission notes that Nuova
        Castelli produces and trades buffalo milk mozzarella.286 However, Lactalis does
        not produce buffalo milk mozzarella but only trades a limited volume under its own
        brand.
285   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
286   Form CO, paragraph 360.
                                                       51
 ---pagebreak--- (320)    Third, based on the data provided by the Parties, Lactalis trades buffalo milk
         mozzarella manufactured by […], […], and […].287 The Notifying Party submits
         that its contracts with these suppliers, including volumes, are negotiated on […]
         basis.288 The Commission notes that one of the listed suppliers already has access
        to the French retailers and for the others, their contracts with Lactalis are not long-
        term. Accordingly, if post-Transaction, the merged entity increased prices these
        companies could likely increase supplies or try to enter the market directly.
(321)   Fourth, the Commission considers that there are no significant entry or expansion
        barriers to the market for buffalo milk mozzarella in France.
(322)   The market investigation suggested that a potential barrier could be the more
        limited availability of buffalo milk, which is scarcer than cow milk as explained in
        paragraph (195). However, there is a range of players already active on the market
        and this is not regarded as particularly problematic by the Parties' competitors,289
(323)    Similarly distribution and logistics are not regarded as particularly problematic by
        the Parties' competitors as explained in paragraphs (288) to (297) for cow milk
        mozzarella where the organization of distribution through third parties is a viable
        alternative, and given the similarity of the products this would apply also in
        relation to buffalo milk mozzarella.
(324)   Finally, the Commission found that the Transaction does not raise serious doubts as
        to its compatibility with the internal market on the plausible market for branded
        buffalo milk mozzarella in France.
(325)   Based on the above considerations and in the light of the results of the market
        investigation, the Commission considers that the concentration does not raise
        serious doubts as to its compatibility with the internal market as regards the overall
        market for the supply of buffalo milk mozzarella in France.
5.5.3. Ricotta
       (A)       Branded ricotta in France
(326)    For branded ricotta, the combined Adjusted market share of the Parties in 2018 in
         France was [30-40]%, with a marginal increment of [0-5]% in view of Nuova
        Castelli’s very limited brand presence.290
(327)    First, Nuova Castelli had very limited sales of branded ricotta in France in 2018
         ([…]). The Transaction will bring a marginal increment to Lactalis’ market share of
         [0-5]%.
(328)    Second, after the Transaction, the merged entity will continue to face significant
         competitive pressure from the strongest branded competitors to Lactalis,
         e.g. Granarolo. According to the data provided by the Parties and based on the
         Commission’s analysis (see Section 5.2), in 2018 Granarolo represented a superior
         competitive constraint than Nuova Castelli with regard to branded ricotta in France.
         Granarolo’s recorded sales of branded ricotta were […] and accounted for
         [10-20]% of the overall ricotta market in France (see Table 7 below).
287    Form CO, paragraph 360.
288    Form CO, paragraph 365.
289    Questionnaire to competitors (Q1), question 88.
290    The combined value market shares for branded segment are higher (by 5 percentage points) than the
       volume shares provided by the Parties, but both still overstate the Parties’ position compared to panel
       data.
                                                       52
 ---pagebreak--- (329)   Third, the merged entity will also continue to face significant competitive
        constraints from other branded suppliers, such as Ambrosi, which in 2018 had
        combined sales of branded ricotta significantly above those of Nuova Castelli.
        These suppliers of branded ricotta will remain in the French market post-
        Transaction. These suppliers accounted for [5-10]% of the overall market for
        ricotta in France in 2018 (see Table 7 below).
(330)   Fourth, with regard to the ability of customers to switch suppliers of ricotta, the
        majority of customers that responded to the market investigation considered they
        could not quickly switch to an alternative supplier of branded ricotta with a
        comparable range and sufficient quantities;291 however, the majority of responsive
        competitors and customers that expressed a view indicated that it was possible and
        even easy to switch suppliers of ricotta.292
(331)   The Commission has also considered in its assessment the arguments presented in
        the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion, the availability of other
        suppliers and the impact of the Transaction that also apply to the assessment of
        branded ricotta.
(332)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the plausible market of branded ricotta in France.
      (B)        Private label ricotta in France
(333)   Both Parties had sales of private label ricotta in France in 2018 and their combined
        market share in 2018 in France was [70-80]% (in volume), with an increment of
        [20-30]% due to Nuova Castelli’s increase of sales of private label ricotta in 2018.
(334)   First, after the Transaction, the merged entity will continue to face significant
        competitive pressure from several suppliers of private label ricotta that in 2018
        accounted for […] of private label ricotta sold in France (i.e. [10-20]% of the
        overall market, Table 7 below). These suppliers will continue to exercise
        competitive pressure on the merged entity after the Transaction. Although the
        actual sales of private label of other competitors are not available, the Notifying
        Party estimates that Granarolo has a significant share of [20-30]%, and Fior di
        Maso [0-5]%293 is also active on the private label market for ricotta in France.
(335)   Third, with regard to the ability of customers to switch suppliers of ricotta, half of
        the responsive customers that expressed a view indicated that they could quickly
        switch to an alternative supplier of private label ricotta with a comparable range
        and sufficient quantities.294
(336)   The Commission has also considered in its assessment the arguments presented in
        the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion, the availability of other
        suppliers and the impact of the Transaction that also apply to the assessment of
        private label ricotta.
291   Questionnaire to customers (Q2), question 84.1.
292   Questionnaire to competitors (Q1), question 100; Questionniare to customers (Q2), question 83.
293   Parties’ response to Commission’s request for information RFI 22, Annex RFI 22-2.
294   Questionnaire to customers (Q2), question 84.2.
                                                       53
 ---pagebreak--- (337)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the plausible market of private label ricotta in France.
      (C)        Overall market for ricotta in France
(338)   Based on the Commission’s methodology, Adjusted market shares for the overall
        market for ricotta in France are as follows.
                                                     Table 7
                                        France 2018, Ricotta295
                     Branded and private label – Adjusted market shares
              Competitor                               Sales, tons         Market Share
              Lactalis - branded                           […]               [10-20]%
              Lactalis – private label                     […]               [30-40]%
              Nuova Castelli - branded                     […]                 [0-5]%
              Nuova Castelli private label                 […]               [20-30]%
              Combined Parties PL + B                      […]               [60-70]%
              Granarolo                                    […]               [10-20]%
              Ambrosi                                      […]                 [0-5]%
              Others - branded                             […]                [5-10]%
              Others private label                         […]               [10-20]%
              Total sales                                  1739                 100%
(339)   The Transaction results in an affected market due to the Parties’ sales of private
        label ricotta, bringing an increment of Lactalis’ market share of [20-30]%.
(340)   Beside the shares of the market for ricotta in France, the Commission considers
        that the Transaction does not raise serious doubts for the following reasons.
(341)   First, after the Transaction, the merged entity will continue to face significant
        competitive pressure from Granarolo ([10-20]%). According to the data provided
        by the Parties and based on the Commission’s analysis (see Section 5.2 above), in
        2018 Granarolo represented a comparable competitive constraint to Nuova Castelli
        with regard to the overall market for ricotta in France. Granarolo’s recorded sales
        in the overall market of ricotta were slightly below Nuova Castelli’s sales and
        accounted for [10-20]% of the overall ricotta market in France (see Table 7 above)
(342)   Second, the merged entity will also continue to face significant competitive
        pressure from several branded and private label competitors, including Ambrosi.
        These suppliers accounted for [10-20]% of the overall market for ricotta in France
        in 2018 (see Table 7 above). These competitors together with Granarolo are likely
        to continue exercising competitive pressure on the merged entity comparable to the
        pressure exercised by Nuova Castelli on Lactalis pre-Transaction.
295   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
                                                       54
 ---pagebreak--- (343)    Third, with regard to the ability of customers to switch suppliers of ricotta, while
         the majority of customers that responded to the market investigation had not
         switched suppliers of branded or private label ricotta in the last three years,296 the
         majority of responsive competitors and customers that expressed a view indicated
         that it was possible and even easy to switch suppliers of ricotta.297
(344)    Fourth, concerning barriers to entry and expansion, different from other fresh
         cheese products discussed above for which access to milk has been assessed as a
         potential barrier to entry, ricotta is produced from a by-product of other cheese
         production. In particular, as explained by the Notifying Party, ricotta is
         manufactured by heating whey to 80° C. The market investigation confirmed that
         ricotta is a by-product of whey,298 which is a liquid derived from the production of
         soft and fresh cheese (e.g. mozzarella).299 The Parties use their leftovers of whey to
         produce ricotta as well as milk powder. Nuova Castelli also sells part of its whey to
         third parties.
(345)    Moreover, the market investigation also indicated that there has been one entrant in
         the market for ricotta in France in the last 5 years300 and the majority of responsive
         customers indicated that there were not significant barriers to entry or expansion
         for ricotta in terms of costs and time in their countries.301
(346)    Finally, the Commission found that the Transaction does not raise serious doubts as
         to its compatibility with the internal market on the plausible markets for branded
         ricotta in France as well as private label ricotta in France.
(347)    In conclusion, in light of the above and based on the information available to the
         Commission and provided by Parties, the Commission considers that the
         Transaction does not raise serious doubts in the overall market for ricotta in France.
5.5.4. Mascarpone
(348)    At the outset it should be noted Nuova Castelli does not produce, but only trades,
         mascarpone. It purchases […]% of its requirements from […] and resells it as
         further developed in paragraphs (368) to (369).
       (A)        Branded mascarpone in France
(349)    First, Nuova Castelli had limited sales of branded mascarpone in France in 2018.
         The Transaction will bring a limited increment to Lactalis’ market share. Based on
         the Adjusted market shares for 2018, the combined market share of the Parties
         would be [50-60]% with [5-10]% increment.302
(350)    Second, after the Transaction, the merged entity will continue to face significant
         competitive pressure from Granarolo. According to the data provided by the Parties
         and based on the Commission’s analysis (see Section 5.2), in 2018 Granarolo
         represented a superior competitive constraint than Nuova Castelli with regard to
         branded mascarpone in France. The recorded Granarolo’s sales of branded
296    Questionnaire to customers (Q2), questions 81 and 82.
297    Questionnaire to competitors (Q1), question 100; Questionnaire to customers (Q2), question 83.
298    Questionnaire to competitors (Q1), question 15.
299    Questionnaire to competitors (Q1), question 15.1.
300    Questionnaire to competitors (Q1), questions 101 and 101.1.
301    Questionnaire to customers (Q2), question 87.
302    The combined value market shares for branded segment are higher (by less than 5 percentage points)
       than the volume shares provided by the Parties, and both are in line with the Parties’ position
       compared to panel data.
                                                        55
 ---pagebreak---         mascarpone were significantly higher than Nuova Castelli’s sales and accounted
        for [5-10]% of the overall mascarpone market in France.
(351)   Third, the merged entity will also continue to face significant competitive
        constraints from four other branded suppliers (Granarolo, Ambrosi, Galileo, and
        Sterilgarda) which have been identified as top 3 suppliers of branded mascarpone
        by at least one French retailer in the market investigation303 . In addition branded
        mascarpone will continue facing competition from private label mascarpone which
        represents three quarters of the mascarpone market.
(352)   The Commission has also considered in its assessment that the arguments presented
        in the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion, the availability of other
        suppliers, evidence of switching and lack of barriers to switching with respect to
        this plausible market also apply to the assessment of branded mascarpone.
(353)   In view of the above, the Commission finds that the transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        plausible market for branded mascarpone in France.
      (B)        Private label mascarpone in France
(354)   First, both Parties had sales of private label mascarpone in France in 2018 and the
        combined market share in terms of volume is [40-50]% (Nuova Castelli [30-40]%,
        Lactalis [10-20]%).
(355)   Second, after the Transaction, the merged entity will continue to face significant
        competitive pressure from several suppliers of private label mascarpone that in
        2018 accounted for more than […] of private label mascarpone sold in France
        (i.e. [30-40]% of the overall market based on the panel data). These suppliers will
        continue to exercise competitive pressure on the merged entity after the
        Transaction.
(356)   The Commission has also considered in its assessment that the arguments presented
        in the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion, the availability of other
        suppliers, evidence of switching and lack of barriers to switching with respect to
        this plausible market also apply to the assessment of private label mascarpone.
(357)   In view of the above, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        private label mascarpone in France.
      (C)        Overall market for mascarpone in France
(358)   Based on the Commission’s methodology, Adjusted market shares for the overall
        market for mascarpone in France are as follows.
303   Questionnaire to customers (Q2), question 89 and 89.1.
                                                     56
 ---pagebreak---                                                      Table 8
                                     France 2018, Mascarpone304
                     Branded and private label – Adjusted market shares
              Competitor                               Sales, tons         Market Share
              Lactalis - branded                           […]               [10-20]%
              Lactalis – private label                     […]                [5-10]%
              Nuova Castelli - branded                     […]                 [0-5]%
              Nuova Castelli – private label               […]               [20-30]%
              Combined Parties PL + B                      […]               [50-60]%
              Granarolo                                    […]                [5-10]%
              Ambrosi                                      […]                 [0-5]%
              Others - branded                             […]                 [0-5]%
              Others – private label                       […]               [30-40]%
              Total sales                                  9404                 100%
(359)   The Transaction mainly results in an affected market because of Lactalis’ market
        presence with branded products, with strong brands, such as Galbani and Nuova
        Castelli's presence in the private label market for mascarpone in France.
(360)   Beside the considerations concerning the competitive landscape and shares of the
        market for mascarpone in France, the Commission considers that the Transaction
        does not raise serious doubts for the following reasons.
(361)   First, after the Transaction, the merged entity will continue to face significant
        competitive pressure from Granarolo and other brands as well as from private label
        competitors. These competitors are likely to continue exercising competitive
        pressure on the merged entity comparable to the pressure exercised by Nuova
        Castelli on Lactalis pre-Transaction.
(362)   Second, with regard to the ability of customers to switch suppliers of mascarpone, a
        majority of customers that responded to the market investigation considered that it
        was possible to switch to a different supplier of mascarpone305 . Moreover one
        customer switched in the last 3 years its branded mascarpone supplier 'Switched for
        a new, cheaper mascarpone produced in [S]pain'306 .
(363)   Moreover, in relation to the fact that Nuova Castelli distributes […] products, there
        was at least one example of switching which concerned […] being capable to
        directly supply its products in competition with the Parties. In particular, one
        customer indicated that 'This year we contracted directly with […].'307
304   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
305   Questionnaire to customers (Q2), question 92.
306   Courtesy translation from French: " Switch pour un nouveau mascarpone fabriqué en Espagne et plu s
      économique ", Questionnaire to customers (Q2), question 90.1.
307   Courtesy translation from French: "Cette année nous avons contractualisé directement avec […].",
      Questionnaire to customers (Q2), question 91.1.
                                                       57
 ---pagebreak--- (364)   The Commission further observes, as further explained below, that the possibility
        for […] to establish a direct presence on the market would potentially entail that,
        beside the shares for 2018, in the near future there may no longer be an overlap
        between the Parties' activities on this market.
(365)   Third, the Commission notes that, according to the Notifying Party, to produce
        mascarpone, dairy companies can use the milk fat either to produce either cream or
        mascarpone. Manufacturing mascarpone is a way to add value to the left overs of
        the production of cheese. Dairy companies in Italy have a particular incentive to
        manufacture mascarpone: the market for cream is very small in Italy.
(366)   In view of this, the market investigation confirmed that investment to enter
        mascarpone production is relatively low. According to the Notifying Party
        investments for the production of 1,000 tons of mascarpone would amount to
        roughly EUR 1 million. By way of comparison, the entire Lactalis private label
        mascarpone sales in France are […].308
(367)   This finding was confirmed also by retailers responding to the market
        investigation. With regards to potential barriers to entry when asked if there are any
        significant barriers to the entry or expansion for mascarpone in terms of costs and
        time a majority of French retailers answered that there aren't any. Among the few
        French retailers which indicated that there would be barriers, the qualitative
        analysis of their answers shows that the barriers mainly relate to economies of scale
        for logistics in general or for marketing in branded products specifically. For
        example one retailer submitted:'It is necessary to rely on an existing logistic to
        reduce transport costs in France..309 '; and the other one further specifies on
        branded mascarpone: 'It would be difficult to deliver exclusively mascarpone for
        logistics and brand interest reasons. It is preferable to have a full range of
        products including mozzarella and/or ricotta and/or hard cheeses'.310
(368)   Fourth, there has been a new entrant in the mascarpone market in France. As
        mentioned in paragraph (348), Nuova Castelli does not produce, but only trades,
        mascarpone. As explained by the Parties, Nuova Castelli procured the mascarpone
        from […] (approx. […]) and concluded contracts with retailers to sell that
        mascarpone as private label. However, […] has unilaterally indicated that it does
        not wish to continue this commercial relationship. In […], […] put an end to its
        contractual relationship with Nuova Castelli.311 The Parties expect that […] will try
        and contract directly with the retailers, in effect taking over Nuova Castelli’s
        market share.
(369)   In France, for instance, according to the Notifying Party, […] has taken over
        Nuova Castelli’s market share in relation to the […], or at least to the […] brand.312
        The fact that […] is distributing directly its own products to French retailers is
        further confirmed by market investigation. One retailer confirmed: 'This year we
308   As explained in Section 5.3.private label sales were reduced by […] for computing the Adjusted
      market shares.
309   Courtesy translation from French: " Il faut s'appuyer sur une logistique existante pour réduire les
      coûts de transport et de stockage en France ", Questionnaire to customers (Q2), question 96.1.
310   Courtesy translation from French: "Il serait très compliquer de livrer uniquement du mascarpone
      pour des raison logistique et d’intérêt de marque. Il est préférable d'avoir une gamme également de
      mozzarella et/ou ricotta et/ou pâtes dures" Questionnaire to customers (Q2), question 96.1.
311   Form CO, paragraph 726.
312   Form CO, paragraph 727.
                                                       58
 ---pagebreak---          contracted directly with […]''313 , while another retailer specifically mentionned
         […] as an alternative to the Parties.314
(370)    Given the uncertain contractual relationship of Nuova Castelli with its supplier of
         mascarpone, Nuova Castelli's presence on the private label market segment is also
         uncertain, at least until it finds a new alternative producer. However, in light of the
         explanations of the Parties and the retailers responding to the market investigation,
         it is likely that […] market share will significantly increase. Most importantly this
         shows that entering the market for mascarpone is possible, as indicates the example
         of […], a company operating a plant with 10 production lines dedicated to
         mascarpone, ricotta and other spreadable cheeses.
(371)    Finally, the Commission found that the Transaction does not raise serious doubts as
         to its compatibility with the internal market on the plausible markets for branded
         mascarpone in France as well as private label mascarpone in France.
(372)    In conclusion, in light of the above and based on the information available to the
         Commission and provided by Parties, the Commission considers that the
         Transaction does not raise serious doubts in the overall market for mascarpone in
         France.
5.5.5. Gorgonzola
(373)    Lactalis supplies both branded and private label Gorgonzola to retailers in France,
         whereas Nuova Castelli supplies private label Gorgonzola to retailers in France, as
         well as very limited volumes of branded Gorgonzola. Therefore, the Commission
         will assess the likely effects of the Transaction on each of the branded and private
         label segments, as well as on the overall market for Gorgonzola in France.
       (A)        Branded Gorgonzola in France
(374)    First, as regards branded Gorgonzola, the Transaction results in an affected market
         only because of Lactalis’ market presence with branded products, with strong and
         widely recognised brands of Gorgonzola, and in particular Galbani and Gim
         Invernizzi.
(375)    The shares submitted by the Parties, however, may overstate the Parties' presence
         on this market, as suggested by the fact that, when using Adjusted shares based on
         panel data, the market would not be affected, with a combined market shares of the
         Parties on such a plausible market at [10-20]%, with a negligible increment of
         merely [0-5]%.
(376)    Second, this is consistent with the fact that, as a producer, Nuova Castelli does not
         enjoy strong presence in Gorgonzola, as this type of cheese is exclusively produced
         in the PDO territory in northern Italy. As confirmed by a third party, Nuova
         Castelli is a much smaller member of the consortium than players like Igor or
         Lactalis.315
(377)    Third, several other strong competitors of Lactalis supply branded Gorgonzola,
         such as, Igor, the undisputed market leader, as well as Ambrosi and Vivaldi, all of
         them enjoying market shares similar to that of Nuova Castelli. Overall, the Parties’
313     Courtesy translation from French: "Cette année nous avons contractualisé directement avec […].",
       Questionnaire to customers (Q2), question 91.1.
314    Questionnaire to customers (Q2), question 911.
315    Non-confidential version of minutes of a call with a third party, 24 July 2019.
                                                        59
 ---pagebreak---         competitors in the plausible branded market have a strong presence with important
        brands, which account for over 3 times the Parties’ share of this market in France.
(378)   Consistently with these market shares, which point at a fragmented set of suppliers
        which are as large as, or even larger than, Nuova Castelli in the branded market,
        the market investigation supports the finding that a number of credible competitors
        can and do offer volumes of branded Gorgonzola to retailers in France and compete
        in the negotiations organised by retailers.
(379)   A majority of customers expressing views indicated that they source from a
        relatively wide range of suppliers of branded Gorgonzola. In particular, the data
        shows that many of those retailers have sourced from one or more other players
        independent from the Parties in 2018.316
(380)   Therefore, the increment brought about by the Transaction is minimal and several
        credible manufacturers with established commercial relations with retailers in
        France will remain following the Transaction.
(381)   The Commission has also considered in its assessment the arguments presented in
        the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion, the availability of other
        suppliers, and the impact of the Transaction with respect to this plausible market
        also apply to the assessment of branded Gorgonzola.
(382)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the plausible market of branded Gorgonzola in France..
      (B)        Private label Gorgonzola in France
(383)   Nuova Castelli focuses in France on the supply of Gorgonzola to retailers to be
        resold under private label. In this plausible market, the position of Nuova Castelli is
        stronger.
(384)   Based on the data provided by the Parties, their combined share in the supply
        (including variable weight) of private label Gorgonzola to retailers in France in
        terms of volume in 2018 was [30-40]%, with an increment of [5-10]%. Therefore,
        the increment resulting from the Transaction also on the private label side of the
        market is moderate.
(385)   Moreover, a number of viable competitors offer volumes of Gorgonzola to retailers
        in France and compete in the tenders organised by retailers for private label
        Gorgonzola. A majority of customers expressing views in the market investigation
        indicated that they source from a relatively wide range of suppliers of Gorgonzola,
        Igor being the most important. In particular, the data shows that many retailers
        expressing views sourced from other players independent from the Parties
        in 2018.317
(386)   The Commission has also considered in its assessment the arguments presented in
        the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion, the availability of other
        suppliers, and the impact of the Transaction.
316   Questionnaire to customers (Q2), question 98.
317   Questionnaire to customers (Q2), question 70.
                                                    60
 ---pagebreak--- (387)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the plausible market of private label Gorgonzola in France.
      (C)        Overall market for Gorgonzola in France
(388)   Based on the Commission’s Adjusted market shares, the combined market share of
        Lactalis and Nuova Castelli is [20-30]%, with an increment of [10-20]%. In line
        with the findings for the separate segments for branded and private label products,
        the increment of the Transaction mainly relates to the supply of branded products.
                                                     Table 9
                      France 2018, Gorgonzola - incl. variable weight318
                     Branded and private label – Adjusted market shares
              Competitor                                Sales, tons         Market Share
              Lactalis - branded                            […]                [5-10]%
              Lactalis – private label                      […]                 [0-5]%
              Nuova Castelli - branded                      […]                 [0-5]%
              Nuova Castelli - private label                […]               [10-20]%
              Combined Parties PL + B                       […]               [20-30]%
              Others - branded                              […]               [40-50]%
              Others – private label                        […]               [20-30]%
              Vivaldi                                       […]                 [0-5]%
              Igor                                          […]                 [0-5]%
              Ambrosi                                       […]                 [0-5]%
              Total sales                                  1879                  100%
(389)   The Commission observes that the market for Gorgonzola appears to be rather
        fragmented with several active players both in the branded and private label
        segments.319 The Commission considers that following the Transaction, several
        credible competitors will continue to exert effective competitive pressure on the
        Parties, in particular, Igor, Vivaldi, Ambrosi, but also other manufacturers of
        Gorgonzola (e.g. Emilio Mauri, Biraghi Bassi).
(390)   Beside the considerations concerning the market structure of Gorgonzola, the
        Commission finds, based on the market investigation, that barriers to entry and
        expansion are not high for suppliers of Gorgonzola in France.
(391)   When market conditions are such that competitors have sufficient capacity and find
        it profitable to expand output sufficiently, the Commission is unlikely to find that
        the merger would significantly impede effective competition.320 Conversely, when
        market conditions are such that the competitors of the merged entity are unlikely to
        increase their supply significantly should prices increase, the merged entity may
318   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
319   Non-confidential version of minutes of a call with a third party, 24 July 2019.
320   Horizontal Merger Guidelines, paragraph 33.
                                                       61
 ---pagebreak---         have an incentive to reduce output below the combined pre-merger levels thereby
        raising market prices.321
(392)   First, from the point of view of customers, the market investigation suggested that
        the majority of retailers expressing views did not indicate that there are barriers in
        terms of cost and time.322
(393)   Second, from the point of view of production, the majority of market respondents
        indicated that the costs and delays to incur to enter or expand production are not
        significant.323
(394)    Third, it should be recalled that the market for Gorgonzola is strictly regulated by
         the Consorzio Gorgonzola PDO. The production of Gorgonzola is affected by
         quotas of membership in the consortium and that the consortium controls the
         production levels. While both Parties are members of this consortium, Lactalis
         share amounts to [10-20]%, and Nuova Castelli’s share is much smaller. A large
         majority of consortium quotas remains in the hands of other producers, including
         leading member Igor which represents [40-50]% of the consortium.
(395)   The Notifying Party explained that the production of Gorgonzola for the domestic
        market, as well as the exports of Gorgonzola outside of Italy, are largely dominated
        by the market leader Igor, which accounts for [40-50]% of the total production of
        Gorgonzola and [60-70]% of the total exports outside of Italy. By comparison,
        Lactalis and Nuova Castelli respectively account for [10-20]% and [0-5]% of the
        total production of Gorgonzola. Likewise, they respectively account for only
        [10-20]% and [0-5]% of the total exports outside of Italy.324
(396)   As a consequence, the Parties only account for a limited part of the production and
        exports outside of Italy, so that retailers in France could likely find alternative
        sources of supply for Gorgonzola.
(397)    Consistent with the above findings, the majority of customers in France responding
        in the market investigation do not consider that the Transaction will have an impact
         on the supply of Gorgonzola.325
(398)    Finally, the Commission found that the Transaction does not raise serious doubts as
         to its compatibility with the internal market on the plausible markets for branded
         Gorgonzola in France as well as private label Gorgonzola in France.
(399)    Based on the above considerations and in the light of the results of the market
         investigation, the Commission considers that the Transaction does not raise serious
         doubts as to its compatibility with the internal market on the overall market for the
         supply of Gorgonzola in France.
5.5.6. Feta
(400)    At the outset it should be noted that Nuova Castelli does not produce, but only
         trades Feta. It purchases […]% of its requirements from third parties such as […].
321    Horizontal Merger Guidelines, paragraph 32
322    Questionnaire to customers (Q2), question 105.
323    Questionnaire to competitors (Q1), question 124.
324    Parties’ submission “Briefing Memorandum No 1”, dated 17.10.2019, paragraph 61.
325    Questionnaire to customers (Q2), question 124.
                                                        62
 ---pagebreak--- (401)   With regard to Feta PDO, the Notifying Party indicates that:
        (a)     Nuova Castelli does not produce Feta PDO, it only acts as a trader. Nuova
                Castelli has a distribution agreement with the producer […] (and other
                various small producers). Nuova Castelli sells […] of Feta PDO across the
                EEA, and more precisely in France, the UK, Poland and Portugal;
        (b)     Lactalis produces Feta PDO in Greece (Volos) and sells […] of Feta PDO
                across the EEA, and more precisely in Germany and Austria326 but not in
                France.
(402)   It follows from these elements that the Transaction does not raise serious doubts in
        the French market for the supply of branded Feta PDO.
(403)   However considering all plausible market definitions, there would be an overlap
        considering the market for Feta and Feta-type cheese such as Lactalis brand
        Salakis.
      (A)        Branded Feta-type cheeses in France
(404)   First, Nuova Castelli had de minimis sales of branded Feta-type cheeses in France
        in 2018. The Transaction will bring a limited increment to Lactalis’ market share of
        under [0-5]%327 .
(405)   Second, after the Transaction, the merged entity will continue to face significant
        competitive pressure from Bel. According to the data provided by the Parties and
        based on the Commission’s analysis (see Section 5.2), in 2018 Bel represented a far
        superior competitive constraint than Nuova Castelli with regard to Feta-type
        cheeses in France.
(406)   The Commission has also considered in its assessment that the arguments presented
        in the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry, the availability of other suppliers, lack of
        barriers to switching with respect to this plausible market also apply to the
        assessment of branded Feta-type cheeses.
(407)   In view of the above, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        plausible market for branded Feta-type cheeses in France.
      (B)        Private label Feta-type cheeses in France
(408)   First, both Parties had sales of private label Feta-type cheese in 2018 and their
        combined market share was [40-50]%. (Lactalis: [20-30]%, Nuova
        Castelli: [10-20]%).
(409)   Second, after the Transaction, the merged entity will continue to face significant
        competitive pressure from several suppliers of private label Feta-type cheeses that
        in 2018 accounted for […] of private label Feta-type cheeses sold in France
        (i.e. [20-30]% of the overall market). These suppliers will continue to exercise
        competitive pressure on the merged entity after the Transaction.
(410)   The Commission has also considered in its assessment that the arguments presented
        in the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry, the availability of other suppliers, lack of
326   Lactalis also produces fresh cheese in brine (such as Salakis), which is not Feta DOP.
327   The combined value market shares for branded segment are lower than the volume shares provided by
      the Parties, and both understate the Parties’ position compared to panel data.
                                                         63
 ---pagebreak---         barriers to switching with respect to this plausible market also apply to the
        assessment of private label Feta-type cheeses.
(411)   In view of the above, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        plausible market for private label Feta-type cheeses in France.
      (C)        Overall market for Feta-type cheeses in France
(412)   Based on the Commission’s methodology, Adjusted market shares for the overall
        market for ‘Feta-type’ cheeses in France are as follows.
                                                    Table 10
                                  France 2018, Feta-type cheeses328
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]               [30-40]%
              Lactalis – private label                     […]               [10-20]%
              Nuova Castelli - branded                     […]                 [0-5]%
              Nuova Castelli – private label               […]               [10-20]%
              Combined Parties PL + B                      […]               [50-60]%
              Bel                                          […]                [5-10]%
              Eurial                                       […]                 [0-5]%
              Others - branded                             […]               [60-70]%
              Others - private                             […]               [20-30]%
              Total sales                                 11488                 100%
              Note: Internal branded sales were inserted for Nuova Castelli as there
              was no entry in the panel
(413)   The Transaction results in an affected market because of Lactalis’ large market
        presence with branded products, with strong and widely recognised brands, such as
        Salakis. Nuova Castelli has a more limited presence in the overall market for Feta-
        type cheeses in France, brining an increment of [10-20]% to Lactalis’ market share
        almost exclusively from private label sales.
(414)   Beside the considerations concerning the competitive landscape and shares of the
        market for Feta-type cheeses in France, the Commission considers that the
        Transaction does not raise serious doubts for the following reasons.
(415)   First, after the Transaction, the merged entity will continue to face significant
        competitive pressure from Bel with the Syrtos Brand on the branded side. On the
        private label side there are several credible alternatives. The Parties listed the
        competitors and indicated an estimation of their private label market share in
        France as follows: Arla: [10-20]%; LA Farm: [10-20]%; Tyras: [5-10]%;
        Hochland: [5-10]%. These competitors are likely to continue exercising
        competitive pressure on the merged entity comparable to the pressure exercised by
        Nuova Castelli on Lactalis pre-Transaction.
328   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
                                                       64
 ---pagebreak--- (416)   In view of the Parties' activities, moreover, some competitors are also closer to
        Lactalis as manufacturers of their own product, as opposed to Nuova Castelli which
        does not have manufacturing activities for Feta-type cheeses.
(417)   In both branded and private label, the existence of a number of credible
        competitors offering volumes of Feta-type cheeses to retailers in France and
        competing in the negotiations organised by retailers is not only confirmed by
        qualitative descriptions of market interaction by such customers, but also
        confirmed by actual sourcing information. Data collected from retailers shows that
        a majority of customers expressing views source from a relatively wide range of
        suppliers.
(418)   The market investigation suggests that there is a              significant number of suppliers
        able to supply the French market. When asked                   for their suppliers the French
        retailers expressing views          listed the following       companies329 : Pierre Meyer
        GMBH, Icewind, Dodoni, Granarolo, Olympus,                       Alliance Eurofood, Per'Inter
        Chirag.
(419)   Second, with regard to the ability of customers to switch suppliers of Feta-type
        cheeses, the market investigation confirmed that it was possible. When asked for
        their ability to switch to a different supplier of Feta large majority of French
        retailers that expressed a view considered that the switch was possible for Feta-type
        cheeses.330 Out of those respondents one said that it would be easy and the rest
        confirming that it would not be easy but possible. It is to be noted that the one
        saying that it would be easy confirmed that it had actually switched supplier for
        Feta in the last 3 years.331
(420)   Third, concerning barriers to entry and expansion, the results of the market
        investigation were not conclusive. Half of the French retailers that expressed a
        view in the market investigation indicated that there were significant barriers to
        expansion in terms of costs and time, whereas others indicated that there were no
        such barriers.332
(421)   However, market investigation confirms that entry and expansion is possible in this
        market as there have been new players expanding and continuing to expand on this
        market. When asked if there has been some new entrants in the last three years, a
        French retailer explained: 'Olympus is very active on the French market,
        specifically on private label with very low prices. This competitor will continue to
        grow in France in the coming three years.'333
(422)   It is also to be noted that Nuova Castelli is only a distributor of the Feta-type
        cheese products and that one its main suppliers […] has been mentioned as an
        alternative supplier by two French retailers. 334
329   Questionnaire to customers (Q2), question 115.
330   Questionnaire to customers (Q2), question 117.
331   Questionnaire to customers (Q2), question 116.1.
332   Questionnaire to competitors (Q1), question 121.
333   Courtesy translation from French: “'Olympus démarche assez fortement le marché français, en
      particulier les MDD, avec des prix très bas. Il va continuer à gagner du terrain en France dans les 3
      prochaines années”, Questionnaire to customers (Q2), question 122.1.
334   Questionnaire to customers (Q2), question 115.
                                                        65
 ---pagebreak--- (423)    Finally, the Commission found that the Transaction does not raise serious doubts as
         to its compatibility with the internal market on the plausible markets for branded
         feta-type cheeses in France as well as private label feta-type cheeses in France.
(424)    In conclusion, in light of the above and based on the information available to the
         Commission and provided by Parties, the Commission considers that the
         Transaction does not raise serious doubts in the overall market for Feta-type
         cheeses in France.
5.5.7. Italian-type hard cheeses
(425)    Lactalis supplies only branded Italian-type hard cheese, whereas Nuova Castelli
         supplies both branded and private label hard cheese in France.
       (A)        Branded Italian-type hard cheeses in France
(426)    First, Nuova Castelli had de minimis sales of branded Italian-type hard cheeses in
         France in 2018. The Transaction will bring a limited increment of [0-5]%335 to
         Lactalis’ market share of [10-20]%.
(427)    Second, after the Transaction, the merged entity will continue to face significant
         competitive pressure from other competitors. According to the data provided by the
         Parties and based on the Commission’s analysis (see Section 5.2), in 2018
         Granarolo and Parmareggio represented a far superior competitive constraint than
         Nuova Castelli with regard to branded Italian-type hard cheeses in France.
(428)    The Commission has also considered in its assessment that the arguments presented
         in the below section as regards the overall market, and in particular concerning the
         availability of other suppliers, lack of barriers to switching with respect to this
         plausible market also apply to the assessment of branded Italian-type hard cheeses.
(429)    In view of the above, the Commission finds that the Transaction does not raise
         serious doubts as to its compatibility with the internal market with regard to the
         branded Italian-type hard cheeses.
       (B)        Overall market for Italian-type hard cheeses in France
(430)    Based on the market share data submitted by the Parties and in light of the
         methodology described in Section 5.2, the combined Adjusted market shares of the
         Parties in volume terms in 2018 were: [20-30]% (Lactalis: [0-5]%; Nuova
         Castelli: [20-30]%).
335    The combined value market shares for branded segment are lower than the volume shares provided by
       the Parties, and both understate the Parties’ position compared to panel data.
                                                          66
 ---pagebreak---                                                     Table 11
                             France 2018, Italian-type hard cheese336
                      Branded and private label – Adjusted market shares
              Competitor                               Sales, tons         Market Share
              Lactalis - branded                           […]                 [0-5]%
              Nuova Castelli - branded                     […]                 [0-5]%
              Nuova Castelli private label                 […]               [20-30]%
              Combined Parties PL + B                      […]               [20-30]%
              Granarolo                                    […]               [10-20]%
              Parmareggio                                  […]                [5-10]%
              Ferrari                                      […]                 [0-5]%
              Ambrosi                                      […]                 [0-5]%
              Others - branded                             […]                 [0-5]%
              Others private label                         […]               [40-50]%
              Total sales                                  9155                 100%
(431)   First, Lactalis depends on the supply from other manufacturers, such as […] or
        […], for its trading activity of Italian-type hard cheeses.337 The Notifying Party
        explained […].338
(432)   Second, the Commission also observes that the branded segment in the overall
        market for Italian-type hard cheeses has around [30-40]% share, which would
        indicate that the main competitive constraint in the market comes from private
        label Italian-type hard cheeses, irrespective of whether it belongs to the same
        market or it is assessed as a constraint from outside the market.
(433)   Third, the very low increment due to Lactalis' sales of traded products shows that,
        even if in shares terms the increment for branded products is nominally higher; it is
        representative of very limited volumes.
(434)   Fourth, competition for Italian-type hard cheeses, which encompass products
        covered by a Protected Denomination of Origin, is less affected by brand presence
        in view of the predominant role carried, with respect to customer recognition and
        quality perception, by such denominations (Parmigiano Reggiano, Grana Padano).
        Therefore, it makes the assessment of a market only consisting of branded product
        much less significant in this context. In particular, the Parties submitted that brands
        carry little weight as the selling point is mostly the PDO branding. And the
        presence of the PDO logos on a cheese wheel or bag of Parmigiano Reggiano
        ensures and indicates to the consumer that this cheese is produced, and the milk
        collected, exclusively in the PDO area, delivering recognition and quality
        perception expected from a brand. In line with this one competitor also explained:
336   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
337   Form CO, paragraph 360, see also Parties’ response to the Commission’s request for information
      RFI 14, questions 1 and 5.
338   Form CO, paragraph 365.
                                                       67
 ---pagebreak---         “The PDO brands enjoy high notoriety that it takes away “space” from private
        brands and indirectly attracts attention of private labels”.339
(435)   Fifth, with reference to the limited quantities supplied by Lactalis as a trader of
        these products in France, there exist several other competitors who compete not
        only in the trading, but also as producers of PDO cheeses within Italian-type hard
        cheeses because they either have quotas in consortia (Grana Padano) or obtain milk
        from consortia (Parmigiano Reggiano).
(436)   The Parties do not overlap in this respect, as Lactalis is not active in the production,
        and Nuova Castelli has limited overall shares of production in relation to PDO
        cheeses.
(437)   Sixth, also in view of this, Lactalis and Nuova Castelli are not close competitors.
(438)   Seventh, different from other Italian-type cheeses, Lactalis is not recognised as an
        important player with respect to these products. In the market investigation while
        Lactalis is mentioned by two retailers among main suppliers of Italian-type hard
        cheese in France, numerous other suppliers are also mentioned, Nuova Castelli,
        Granarolo, Sodiaal, Savencia, Trentin, Latteria Soerisina, Colla, Ambrosi,
        Fromagers associés, virgilio and Soster.340 The fact that there are a lot of
        competitors on this market is confirmed and explained by a French retailer: ‘There
        are a lot of competitors. Those are high value products with limited transport cost
        and large volumes.’ 341
(439)   Finally, the Commission found that the Transaction does not raise serious doubts as
        to its compatibility with the internal market on the plausible markets for branded
        Italian-type hard cheeses as well as private label Italian-type hard cheeses.
(440)   Based on the above considerations and in the light of the results of the market
        investigation, the Commission considers that the Transaction does not raise serious
        doubts as to its compatibility with the internal market on the overall market for the
        supply of Italian-type hard cheeses in France.
5.5.8. Other markets
(441)   The Transaction results in additional affected markets in France, and in particular
        in the plausible markets for fresh dairy desserts and butter.
(442)   However, in all these markets the Transaction results in a negligible increment due
        to the small presence of Nuova Castelli, bringing a limited increment to Lactalis’
        shares.
(443)   On this basis the Commission finds that the Transaction does not raise serious
        doubts concerning these markets.
339    Courtesy translation from Italian: “Il valore del brand DOP è talmente forte che toglie "spazio" ai
       Brand privati e, indirettamente, stimola l'attenzione delle private labels”, Questionnaire (Q1),
       question 128.1.
340    Questionnaire to customers (Q2), question 107.
341    Courtesy translation from French: "Il y a beaucoup d'intervenants. Ce sont des produits valorisés
       dans lequel le coût de transport est faible. Il y a de gros volumes.", Questionnaire to customers (Q2),
       question 109.
                                                          68
 ---pagebreak--- 5.6.   The United Kingdom
(444)    Based on the market share data submitted by the Parties and in light of the
         methodology used (see Section 5.2), the Transaction gives rise to the following
         horizontally affected plausible markets in the United Kingdom (the UK): Cow milk
         mozzarella (Section 5.6.1); Buffalo milk mozzarella (Section 5.6.2); ricotta
         (Section 5.6.3); mascarpone (Section 5.6.4); Gorgonzola (Section 5.6.5); Italian-
         type hard cheese (Section 5.6.6).
5.6.1. Cow milk mozzarella
(445)    Both Lactalis and Nuova Castelli supply branded and private label cow milk
         mozzarella in the UK. Lactalis is the largest supplier of branded and second largest
         of private label cow milk mozzarella. Nuova Castelli is the largest private label
         supplier and has some very limited sales of branded cow milk mozzarella. In light
         of this, the Commission will assess the likely effects of the Transaction on each of
         the branded and private label segments, as well as on the overall market for cow
         milk mozzarella in the UK.
       (A)         Branded cow milk mozzarella in the United Kingdom
(446)    First, the Commission notes that the third party data relied on by the Commission
         to establish the Adjusted market shares of the Parties and their competitors does not
         indicate an overlap for the supply of branded cow milk mozzarella.
(447)    An overlap between the Parties’ activities was only identified because actual
         supply data from the Parties suggested an actual delivery of very minor quantities
         by Nuova Castelli to the UK in 2018 ([…]) of branded cow milk mozzarella.342
        Accordingly, based on the market share data submitted by the Parties, if potentially
        relevant segment for branded cow milk mozzarella was considered, the combined
        market shares of the Parties would be [90-100]% (Lactalis: [90-100]%; Nuova
        Castelli [0-5]%).343
(448)    However, third party data, as explained in Section 5.2, does not specify small sales
         and also does not track all outlets in the retail channel. This is why, in the Adjusted
         market shares table Nuova Castelli appears not to have any presence in branded
         products. In light of this, the market shares as submitted by the Parties are likely
         overestimated. In particular, similarly to Nuova Castelli, other suppliers, which
         constitute a competitive pressure on the Parties, are likely not recorded by the same
         data sources that do not record Nuova Castelli. Similarly, other suppliers recorded
         and specified by the third-party panel data (see Table 12) would likely have higher
         sales than Nuova Castelli, are Granarolo, Daiya, and Valcolatte.
(449)    Second, the very low increment of [0-5]% to the market shares corresponds, as
         explained above, to […] in the entire year 2018.
(450)    Third, Nuova Castelli does not enjoy strong brand presence. As the Parties
         explained, Nuova Castelli specializes in the supply of private labels, its brands are
         little known.344 In contrast, the majority of the UK customers expressing views in
        the market investigation mentioned Lactalis’ brand Galbani as the strongest brand
342    Parties’ response to Commission’s request for information RFI 22.
343    The value market shares for branded segment are in line with the volume shares provided by the
       Parties and both overstate the Parties’ position compared to panel data.
344    Parties’ submission “Briefing Memorandum No 3”, dated 20.11.2019.
                                                          69
 ---pagebreak---         for cow milk mozzarella.345 In addition, none of the respondents from the UK
        responding in the market investigation submitted that Nuova Castelli and Lactalis
        are close competitors.346 The Commission considers that this also supports the
        finding that Nuova Castelli has only very limited importance as a competitive
        constraint for the competition in the branded segment.
(451)   Fourth, several additional smaller suppliers of branded cow mozzarella will remain
        in the UK market following the Transaction. These suppliers would account for at
        least [5-10]% of the branded cow milk mozzarella supplies in the UK.
(452)   Fifth, the Commission observes that the branded segment in the overall market for
        cow milk mozzarella has only approximately [10-20]% share of the overall market.
        For example, some retailers in the UK do not even carry branded products and
        cover the whole demand for cow milk mozzarella with private label Italian
        cheese.347 The Commission considers that very small share of branded segment
        indicates that the main competitive constraint in the market comes from the
        suppliers of private label cow milk mozzarella, irrespective of whether it would be
        assessed as belonging to the overall market or if it was assessed as an exogenous
        constraint on the hypothetically relevant market for branded cow milk mozzarella.
(453)   In light of the above and given the limited increment, the Commission considers
        that the Transaction will not substantially modify the market structure and will not
        remove a significant competitive constraint for branded cow milk mozzarella in
        the UK.
(454)   In its assessment of this plausible market, the Commission also considered the
        arguments presented in the below section on the overall market, and in particular
        concerning the absence of significant barriers to entry and expansion and the
        availability of other suppliers.
(455)   In conclusion and based on the information available to the Commission and
        provided by Parties, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        plausible market of branded cow milk mozzarella in the UK.
      (B)         Private label cow milk mozzarella in the United Kingdom
(456)   For the supply of private label cow milk mozzarella, based on the Parties’ estimates
        using downstream market share at retail level as a proxy to estimate market shares
        at procurement level,348 their combined market shares in volume terms in 2018
        would be [30-40]% (Lactalis: [10-20]%; Nuova Castelli: [20-30]%).
(457)   While following the Transaction the Parties would have moderate shares for the
        supply of private label cow milk mozzarella, the Commission considers that the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market on the plausible market for private label cow milk mozzarella in the UK for
        the reasons set out below.
345   Questionnaire to customers (Q2), question 50.
346   Questionnaire to customers (Q2), question 67.
347   Non-confidential version of minutes of a call with a customer, 26 September 2019; see also
      Questionnaire to customers (Q2), question 68.1.
348   Parties’ response to the Commission’s request for information RFI 22.
                                                      70
 ---pagebreak--- (458)   First, the merged entity will continue to face significant competitive pressure from
        several other suppliers, which in 2018 accounted for more than […] (i.e. [50-60]%
       of the overall market). The Commission notes that based on the Parties’ estimates
       the main alternative supplier of private label cow milk mozzarella in the UK is Zott
       with a market share between [20-30]%; other suppliers, such as Spezialitäten-
       Käserei Wiegert Jäger, Goldsteig Käsereien Bayerwald are present with each
       having an estimated market share of [5-10]%, while Caseificio Villa, Capurso,
       Caseificio Palazzo, Bayerische Milchindustrie, and Granarolo are present with each
       having an estimated market share of[0-5]%.349 The respondents to the market
       investigation listed only few companies as their actual or potential private label
       suppliers of cow milk mozzarella, such as Zott and Glanbia.350
(459)   Second, as explained above, in the UK, private label covers approximately
        [90-100]% of the demand for cow milk mozzarella. Some of the UK customers
       expressing their views indicated that they offer different qualities ranging from
       low-tier to top tier private label mozzarella.351 In addition, all UK customers
       expressing their views indicated that it is important for a mozzarella supplier to
       have mozzarella “made in Italy”.352 However, from the explanations submitted it
       appears that origin criterion likely applies only in relation to certain part of demand
       commanding higher price.353 As one customer explained: "Price matters for some
       customers, origin for others".354 Furthermore, the majority of UK customers
       expressing their views also submitted that mozzarella “made in Italy” is either fully
       or largely substitutable with mozzarella without specific origin indication.355
(460)   Third, as regards the alternative suppliers of private label cow milk mozzarella, the
        list provided by the Parties indicates that there are a number of Italian
        manufacturers (Caseificio Villa, Capurso, Caseificio Palazzo, and Granarolo)
        alongside non-Italian manufacturers (e.g. Zott, Spezialitäten-Käserei Wiegert Jäger,
        Goldsteig Käsereien Bayerwald), that could cater for the differentiated demand for
        private label cow milk mozzarella.
(461)   Fourth, the UK customers expressing their views submitted, however, that while it
        may not be easy, it is possible to switch to a different private label supplier of cow
        milk mozzarella.356 As one UK retailer explained: “there are alternative
       suppliers”.357 More particularly, half of the UK customers expressing views
       indicated that they had switched private label suppliers of cow milk mozzarella in
       the last three years in a competitive process.358
349   Parties’ response to the Commission’s request for information RFI 22, see also Annex RFI 22-2-4,
      paragraph 56.
350   Questionnaire to customers (Q2), question 70; Questionnaire to competitors (Q1), question 73;
      Non-confidential version of minutes of a call with a customer, 26 September 2019.
351   Questionnaire to customers (Q2), question 5.
352   Questionnaire to customers (Q2), question 63.
353   See, for example, Non-confidential version of minutes of a call with a customer, 26 September 2019.
354   Questionnaire to customers (Q2), question 63.1.
355   Questionnaire to customers (Q2), question 13.
356   Questionnaire to customers (Q2), question73.
357   Questionnaire to customers (Q2), question 73.1.
358   Questionnaire to customers (Q2), question 72.
                                                       71
 ---pagebreak--- (462)   Fourth, even though one retailer expressed concerns that there are few alternative
        suppliers for the supply of mozzarella “made in Italy” : “Lactalis and Nuova
        Castelli are currently the only 2 viable options in terms of cost, quality and
        services offered to the customer”,359 the Commission notes that overall the results
        of the market investigation suggest that the market for private label cow milk
        mozzarella is competitive and the price is a significant factor for determining the
        choice of suppliers in tenders.360 Furthermore, none of the UK customers
        responding to the market investigation indicated that, if the merged entity increased
        prices, they could not quickly switch to an alternative supplier with a comparable
        product range and sufficient quantities.361
(463)   Fifth, given that competitive selection process for private label supply is driven by
        retailers, the Commission notes that the majority of the retailers in the UK
        expressing their views submitted that they select their private label suppliers once a
        year or even less than once a year.362 Furthermore, the results of the market
        investigation suggest that retailers in the UK do not commit to the specific volumes
        and generally have price adjustment-mechanisms in their contracts with suppliers
        of private label cow milk mozzarella, which would indicate that retailers likely
        have a strong negotiation position.363
(464)   In its assessment of this plausible market, the Commission also considered the
        arguments presented in the below section as regards the overall market, and in
        particular concerning the absence of significant barriers to entry and expansion and
        the availability of other suppliers.
(465)   In conclusion and based on the information available to the Commission and
        provided by Parties, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        plausible market of private label cow milk mozzarella in the UK.
      (C)          Overall market for cow mozzarella in the United Kingdom
(466)   Based on the market share data submitted by the Parties and in light of the
        methodology described in Section 5.2, the combined Adjusted market shares of the
        Parties in branded and private label in volume terms in 2018 were: [40-50]%
        (Lactalis: [20-30]%; Nuova Castelli: [10-20]%).
359   Non-confidential version of minutes of a call with a customer, 26 September 2019.
360   Questionnaire to customers (Q2), question 75.2, all respondents expressing views mentioned price as
      the first criterion, followed by quality.
361   Questionnaire to customers (Q2), question 74.2.
362   Questionnaire to customers (Q2b), question 4.
363   Questionnaire to customers (Q2b), questions 7 and 8.
                                                       72
 ---pagebreak---                                                  Table 12
                         United Kingdom 2018, Cow milk mozzarella364
                      Branded and private label – Adjusted market shares
              Competitor                               Sales, tons       Market Share
              Lactalis - branded                           […]               [10-20]%
              Lactalis - private label                     […]               [10-20]%
              Nuova Castelli - branded                     […]                [0-5]%
              Nuova Castelli – private label               […]               [10-20]%
              Combined Parties PL + B                      […]               [40-50]%
              Bella (Tertiary Brand)                       […]                [0-5]%
              Granarolo                                    […]                [0-5]%
              Daiya                                        […]                [0-5]%
              Valcolatte                                   […]                [0-5]%
              Others – private label                       […]               [50-60]%
              Total sales                                 12689                100%
              Note: Internal branded sales of Nuova Castelli were recorded
              internally by Nuova Castelli but were not inserted in this table as the
              total of all recorded brands matched the market size
(467)   Overall, during the market investigation customers in the UK expressing their
        views were concerned about Italian-type cheeses including cow milk mozzarella.365
        In contrast, the majority of competitors expressing the views suggested that the
        Transaction will not have an effect on prices or that the prices will decrease for
        cow milk mozzarella in the UK.366
(468)   However, even though the concentration gives rise to moderate combined market
        shares of the Parties, the Commission considers that the Transaction does not raise
        serious doubts for the supply of cow milk mozzarella to retailers in the UK for the
        reasons set out in Sections (A) and (B) above, and for the following reasons.
(469)   First, despite large market shares of the Parties, after the Transaction, the merged
        entity will continue to face significant competitive pressure from several private
        label suppliers and branded products suppliers, such as Zott, Valcolatte, Granarolo
        and others.
(470)   Second, the competitors of the Parties are likely to have ability and incentive to
        sufficiently expand capacity and supply larger volumes of cow milk mozzarella,
        should the merged entity increase prices.
(471)   When market conditions are such that rival firms have sufficient capacity and find
        it profitable to expand output sufficiently, the Commission is unlikely to find that
        the merger would significantly impede effective competition.367 Conversely, when
        market conditions are such that the competitors of the merged entity are unlikely to
364   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
365   Questionnaire to customers (Q2), questions 124 and 125.1.
366   Questionnaire to competitors (Q1), question 92.3.
367   Horizontal Merger Guidelines, paragraph 33.
                                                       73
 ---pagebreak---         increase their supply significantly should prices increase, the merged entity may
        have an incentive to reduce output below the combined pre-merger levels thereby
        raising market prices.368
(472)   The Notifying Party has argued that at the EEA level the production capacity for
        cow milk mozzarella is almost double than the total EEA supply.369 The
        Commission was not able to verify the estimate provided by the Parties in its
        market investigation. However, the evidence in the file indicates that several
        competitors, including the manufacturers with Italian production assets, could
        profitably expand the output with their current production assets, while other
        competitors have also indicated their recent and on-going investments in capacity
        expansion.370 For example, an Italian manufacturer, which is already present in the
        UK market, has submitted its capacity expansion plans and the intention to become
        “a serious partner in the private label business”.371 Another manufacturer with
        Italian production facilities also explained that they are currently considering
        expanding the production of their fresh Italian cheeses and have set aside
        investment for this purpose.372 In addition, the Notifying Party suggested that
        expanding production capacity for cow milk mozzarella is not associated with high
        investment and can be done relatively quickly.373
(473)   Second, the barriers to enter or expand into the UK national market appear to be
        low. The Commission has assessed whether it would be possible for alternative
        suppliers of cow milk mozzarella to enter the UK where they are not active or to
        expand supply if they are already present; or if such repositioning of the offering
        would entail risks and large sunk costs that would act as a disincentive against such
        entry or expansion.
(474)   While fresh cheese is a good with a short shelf life, the results of the market
        investigation suggest that in order to be active in the UK, a supplier does not
        necessarily have to own a distribution system and warehouses in the country. The
        Commission notes that one retailer explained that while having a local presence is
        important, “it can be a person who speaks English and knows the UK market”374 .
        This customer further explained that for larger volumes of private label it “does not
        try to reach out to Italian producers directly because of language and distribution
        barriers which would make difficult to manage the supply and the forecast”.375
        However, for smaller volume supplies of other Italian-type cheeses, the customer
        works with an agent from Germany.376 Another customer of the Parties also
        indicated to receive bids for “made in Italy” mozzarella from several UK based
        agents that have expertise and logistics to supply private label products to
        customers.377 This is in line with the results of the market investigation suggesting
368   Horizontal Merger Guidelines, paragraph 32.
369   Parties’ submission “Briefing memorandum No 3”, dated 20.11.2019, paragraph 23.
370   Questionnaire to competitors (Q1b), questions 9-11.
371   Questionnaire to competitors (Q1b), questions 11.4 and 11.3.
372   Non-confidential version of minutes of a call with a competitor, 23 October 2019; Non-confidential
      version of minutes of a call with a competitor, 5 November 2019.
373   Form CO, paragraphs 1061-1062. See also Questionnaire to competitors (Q1b), question 10, where
      several manufacturers of cow mozzarella indicated having increased production of cow milk
      mozzarella significantly without capital expenditure in the last three years.
374   Non-confidential version of minutes of a call with a customer, 26 September 2019.
375   Non-confidential version of minutes of a call with a customer, 26 September 2019.
376   Non-confidential version of minutes of a call with a customer, 26 September 2019.
377   Questionnaire to customers (Q2b), question 9.
                                                        74
 ---pagebreak---         that large majority of suppliers expressing views fully outsource the distribution of
        Italian-type cheeses in the UK to a third-party service provider.378 In certain
        instances, the suppliers submitted that they rely on distributors, while in other
        instances they can rely on logistics companies.379 Based on the results of the
        market investigation, the Commission considers that distribution and logistics
        likely would not constitute a significant barrier to entry or expansion in the UK
        with regard to Italian-type cheeses.380
(475)   Finally, the Commission found that the Transaction does not raise serious doubts as
        to its compatibility with the internal market on the plausible markets for branded
        cow milk mozzarella in the UK as well as private label cow milk mozzarella in
        the UK.
(476)   Based on the above considerations and in the light of the results of the market
        investigation, the Commission considers that the Transaction does not raise serious
        doubts in the overall market for cow milk mozzarella in the UK.
5.6.2. Buffalo milk mozzarella
(477)   As outlined in the Market Definition section in section 4.3.2, the market for the
        supply of buffalo milk mozzarella to retailers is a differentiated market across sales
        channels, where suppliers can compete in branded and in private label cheese.
        Although the presence of suppliers in the same sales channel will be indicative of
        closeness of competition between them, the pricing of private label products will
        have some effect on the pricing ability in the branded side of the market.
(478)   Lactalis supplies only branded buffalo milk mozzarella, whereas Nuova Castelli
        supplies private label buffalo milk mozzarella in the UK. Accordingly, the Parties'
        activities in relation to buffalo milk mozzarella in the UK give rise to an affected
        market only if the overall market including branded and private label was
        considered. In light of this, the Commission will assess the likely effects of the
        Transaction on the overall market for buffalo milk mozzarella in the UK.
(479)   Based on the market share data submitted by the Parties and in light of the
        methodology described in Section 5.2, the combined market shares of the Parties in
        branded and private label in volume terms in 2018 were: [50-60]%
        (Lactalis: [0-5]%; Nuova Castelli: [40-50]%).
378    Questionnaire to competitors (Q1b), question 18.
379    Questionnaire to competitors (Q1b), question 18.1.
380    Questionnaire to competitors (Q1b), questions 17 and 18.
                                                        75
 ---pagebreak---                                                  Table 13
                       United Kingdom 2018, Buffalo milk mozzarella381
                     Branded and private label – Adjusted market shares
              Competitor                               Sales, tons       Market Share
              Lactalis - branded                           […]                [0-5]%
              Nuova Castelli – private label               […]               [40-50]%
              Combined Parties PL + B                      […]               [50-60]%
              Garofalo                                     […]               [20-30]%
              Laverstoke Park                              […]               [10-20]%
              La Contadina                                 […]                [0-5]%
              Others - branded                             […]                [0-5]%
              Others – private label                       […]               [10-20]%
              Total sales                                  293                 100%
(480)   Although, post-Transaction the Parties will have large combined market shares, the
        Commission considers that the concentration does not raise serious doubts for the
        supply of buffalo milk mozzarella in the UK for the following reasons.
(481)   First, the increment brought by the Transaction ([0-5]%) is not significant. The
        limited importance of Lactalis presence in the market for buffalo milk mozzarella
        in the UK as suggested by its market share can be further supported by the finding
        that none of the UK customers responding in the market investigation indicated
        that Lactalis has the strongest or the next to strongest brand for buffalo milk
        mozzarella.382
(482)   Second, there are several strong competitors both in branded and in private label
        segments already supplying the retailers in the UK.
(483)   As can be seen from the market structure in the Table provided above, in the UK,
        branded buffalo milk mozzarella covers a significant share of demand (just a little
        bit below [50-60]%). There are several strong players in the branded segment with
        sales exceeding recorded Lactalis sales by over 3 (Laverstok Park) to 8 (Garofalo)
        times. Notably, Lactalis has only larger sales than La Contadina, an Italian
        manufacturer specialised in production of buffalo milk mozzarella PDO with
        recorded sales of […] in 2018.
(484)   Third, as regards the private label segment, Nuova Castelli is likely the largest
        supplier of private label buffalo milk mozzarella. However, based on the data
        provided by the Parties, other important suppliers of private label buffalo milk
        mozzarella are Garofalo with an estimated overall market share of [30-40]%,
        Casaro del re sociera ([10-20]%), Laverstoke park ([10-20]%), and Sori ([0-5]%).
(485)   Fourth, the Commission considers that the Parties are not close competitors for the
        supply of buffalo milk mozzarella in the UK. The Commission notes that Nuova
        Castelli produces and trades private label buffalo milk mozzarella,383 whereas
381   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
382   Questionnaire to customers (Q2), question 50.
383   Form CO, paragraph 360.
                                                       76
 ---pagebreak---          Lactalis trades limited volumes under its own brand Galbani or Vallelata.384 Given
         the presence of several branded buffalo milk mozzarella suppliers in the UK
         market, the Commission considers that Lactalis brands compete closer to other
         brands, such as Garofalo, than to private label buffalo milk mozzarella.
(486)    Fifth, based on the data provided by the Parties, Lactalis trades buffalo milk
         mozzarella manufactured by […], […], and […].385 The Notifying Party submits
         that its contracts with these suppliers, including volumes, are negotiated on a […]
         basis.386 The Commission notes that all listed suppliers already have access to the
         UK retailers and their contracts with Lactalis are not long-term. Accordingly, if
         following the Transaction, the merged entity increased prices; these companies
         could likely quickly increase their supplies to the UK.
(487)    Sixth, in line with the arguments set out in paragraph (474), the Commission
         considers that there are no significant entry or expansion barriers to the market for
         buffalo milk mozzarella in the UK, in particular as it is a small and rather
         fragmented market (see Table 13) and where the organization of distribution
         through agents is even easier than for larger volumes.387 Accordingly, in addition to
         suppliers that are already active in the UK market, also the suppliers of buffalo
         milk mozzarella in other EEA countries388 , such as Zanetti (active e.g. in France,
         Belgium and Spain), Ambrosi (e.g. France), could likely quickly and without
         incurring significant cost enter the UK market.
(488)    While overall, during the market investigation few customers in the UK expressing
         their views were concerned about Italian-type cheeses, no substantiated concerns
         were formulated in relation to the supply of buffalo milk mozzarella.389
(489)    Based on the above considerations and in the light of the results of the market
         investigation, the Commission considers that the Transaction does not raise serious
         doubts as to its compatibility with the internal market on the overall market for the
         supply of buffalo milk mozzarella.
5.6.3. Ricotta
(490)    Lactalis and Nuova Castelli are active in the market for ricotta in the United
         Kingdom. Both Parties manufacture and sell branded and private label.
       (A)        Branded ricotta in the United Kingdom
(491)    Based on the Commission’s Adjusted market shares methodology, the Parties
         appear to be the only suppliers currently selling branded ricotta in the United
         Kingdom.
(492)    However, this third party data, as explained in Section 5.2, does not always specify
         small sales and also does not track all outlets in the retail channel. Therefore, it
         cannot be excluded that this data source does not record other smaller suppliers of
         ricotta in the UK.
384    Form CO, paragraph 359.
385    Form CO, paragraph 360.
386    Form CO, paragraph 365.
387    Non-confidential version of minutes of a call with a customer, 26 September 2019.
388    Parties’ response to the Commission’s request for information RFI 23. Questionnaire to customers
       (Q2), question 3.1.
389    Questionnaire to customers (Q2), questions 124 and 125.1.
                                                        77
 ---pagebreak--- (493)   Despite the large combined market shares as recorded, first, Lactalis had limited
        sales of branded ricotta in 2018 ([…]). These sales have decreased in the last
        3 years (e.g. Lactalis sales in 2016 were […] and […] in 2017) and in 2018 they
        amounted to less than […].
(494)   Second, Nuova Castelli’s sales of branded ricotta in the United Kingdom were very
        limited in 2018 ([…] with amounted to approximately […]); as a result the panel
        data used by the Commission to conduct the analysis of the market shares (see
        Section 5.2.2 above) indicates that Nuova Castelli has no sales of branded ricotta in
        the United Kingdom. Therefore, it is likely that this methodology results in the
        same outcome for other small suppliers.
(495)   Third, Nuova Castelli’s sales have remained stable in the last three years ([…]
        in 2016 and 2017), thus Nuova Castelli’s is not capturing Lactalis’ lost sales.
        Therefore, it is likely that there are additional suppliers of branded ricotta in the
        United Kingdom that have been exercising competitive pressure on Lactalis pre-
        Transaction and will continue to do so vis-a-vis the merged entity.
(496)   In its assessment of this plausible market the Commission has also considered in its
        assessment the arguments presented in the below section as regards the overall
        market, and in particular concerning the absence of significant barriers to entry and
        expansion and the availability of other actual and potential suppliers.
(497)   In conclusion, based on the information available to the Commission and provided
        by Parties, the Commission finds that the Transaction does not raise serious doubts
        as to its compatibility with the internal market with regard to the plausible market
        of branded ricotta in the United Kingdom.
      (B)         Private label ricotta in the United Kingdom
(498)   According to the market shares provided by the Notifying Party, the Parties appear
        to be the only suppliers currently selling private label ricotta in the United
        Kingdom.
(499)   However, first, the Notifying Party believes that other players are also active in
        private label supply of ricotta in the United Kingdom, such as Caseificio Elda and
        Latte Carso.390
(500)   Moreover, one customer identified Eurilait as a supplier of private label ricotta in
        the United Kingdom.391 Thus, the market structure and market shares proposed by
        the Notifying Party are likely to be overstated.
(501)   Second, Nuova Castelli had moderate sales of private label ricotta in 2018 ([…]),
        which amounted to less than […] in 2018, and Lactalis’ sales of private label
        ricotta in the United Kingdom were limited ([…]) amounting to less than […]
        in 2018.
(502)   Third, with regard to the ability of customers to switch suppliers of ricotta, half of
        the responsive customers that expressed a view indicated that they could quickly
        switch to an alternative supplier of private label ricotta with a comparable range
        and sufficient quantities.392
390   Parties’ response to Commission’s request for information RFI 22, Annex RFI 22-2-4, paragraph 56.
391   Questionnairere to customers (Q2), questions 82 and 82.1.
392   Questionnaire to customers (Q2), question 84.2.
                                                       78
 ---pagebreak--- (503)   In its assessment of this plausible market the Commission has also considered in its
        assessment the arguments presented in the below section as regards the overall
        market, and in particular concerning the absence of significant barriers to entry and
        expansion and the availability of other actual and potential suppliers that also apply
        to the assessment of private label ricotta.
(504)   In conclusion, based on the information available to the Commission and provided
        by Parties, the Commission finds that the Transaction does not raise serious doubts
        as to its compatibility with the internal market with regard to the plausible market
        of private label ricotta in the United Kingdom.
      (C)        Overall market for ricotta in the United Kingdom
(505)   Based on the Commission’s methodology, Adjusted market shares for the overall
        market for ricotta in the United Kingdom are as follows.
                                                      Table 14
                                  United Kingdom 2018, Ricotta393
                      Branded and private label – Adjusted market shares
              Competitor                                Sales, tons         Market Share
              Lactalis - branded                             […]                 [5-10]%
              Lactalis – private label                       […]                [10-20]%
              Nuova Castelli - branded                       […]                  [0-5]%
              Nuova Castelli – private label                 […]                [70-80]%
              Combined Parties PL + B                        […]               [90-100]%
              Others – private label                         […]                  [0-5]%
              Total sales                                    848                   100%
(506)   The Transaction results in an affected market because of Nuova Castelli’s moderate
        sales of private label products in the United Kingdom. Lactalis has a more limited
        presence in the overall market for ricotta. However, the Commission considers that
        the Transaction does not raise serious doubts for the following reasons.
(507)   First, as discussed in paragraphs (499) and (500) above, although the Notifying
        Party’s market shares indicate that Lactalis and Nuova Castelli cover the market for
        private label supply of ricotta394 , the Notifying Party submits that other players are
        also active in private label supply of ricotta in the United Kingdom, such as
        Caseificio Elda and Latte Carso, and the market investigation confirmed the
        presence of another supplier of private label ricotta in the United Kingdom,
        Eurilait.
393   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
394   As explained in Section 5.2.2, the Notifying Party used third-party panel data to establish the market
      size for private label supply. However, given that such panel data does not capture all retailers, and
      the Notifying Party considers that it is even less reliable for small product markets, it is likely that the
      market shares of Lactalis and Nuova Castelli are overstated. In view of this and despite high market
      shares, the Notifying Party submitted that based on their knowledge, other players are active in the
      private label supply of ricotta in the United Kingdom.
                                                        79
 ---pagebreak--- (508)  Second, there are several producers of other fresh cheeses such as Granarolo and
       Valcolatte that currently sell their products in the United Kingdom. These suppliers
       also sell ricotta in other EU countries (e.g. France and Italy). If the Parties were to
       increase prices, Granarolo, Valcolatte and other producers of ricotta currently
       active in other EU countries could potentially enter the market in the United
       Kingdom, in particular given that, as explained in paragraph (474), the market
       investigation indicates that to be active in the United Kingdom a supplier does not
       necessarily have to own a distribution system and warehouses in the country. The
       finding for ricotta is particularly informed by the circumstance that even limited
       deliveries of the product by these suppliers would result in an important decrease in
       shares for the Parties combined.
(509)  Third, with regard to the ability of customers to switch suppliers of ricotta, half of
       the responsive customers indicated that the switch to an alternative supplier was
       possible for private label ricotta.395 In addition, the majority of responsive
       competitors and customers that expressed a view indicated that it was possible and
       even easy to switch suppliers of ricotta.396 Moreover, a British customer switched
       to Eurilait in the last three years in the United Kingdom. 397
(510)  Fourth, concerning barriers to entry and expansion, different from other fresh
       cheese products discussed above for which access to milk has been assessed as a
       potential barrier to entry, ricotta is produced from a by-product of other cheese
       production. In particular, as explained by the Notifying Party, ricotta is
       manufactured by heating whey to 80° C. The market investigation confirmed that
       ricotta is by-product of whey,398 which is a liquid derived from the production of
       soft and fresh cheese (e.g. mozzarella)399 . The Parties use their leftovers of whey to
       produce ricotta as well as milk powder. Nuova Castelli also sells part of its whey to
       third parties.
(511)  Moreover, as discussed in paragraphs (473) and (474) above, the barriers to enter
       or expand into the UK national market appear to be low and, based on the results of
       the market investigation, the Commission considers that distribution and logistics
       likely would not constitute a significant barrier to entry or expansion in the United
       Kingdom with regard to Italian-type cheeses.
(512)  Furthermore, the majority of customers that responded to the market investigation
       indicated that there were not significant barriers to entry or expansion for ricotta in
       terms of costs and time.400
(513)  Fifth, during the market investigation customers in the United Kingdom expressing
       their views were concerned about the impact of the concentration on competition
       for the supply of Italian-type cheeses, which would include ricotta.401 However, a
       competitor indicated to the contrary that prices for ricotta would decrease in the
       United Kingdom following the Transaction.402
395   Questionnaire to customers (Q2), question 84.2.
396   Questionnaire to competitors (Q1), question 100; Questionnaire to customers (Q2), question 83.
397   Questionnaire to customers (Q2), question 82.1.
398   Questionnaire to competitors (Q1), question 15.
399   Questionnaire to competitors (Q1), question 15.1.
400   Questionnaire to customers (Q2), question 87.
401   Questionnaire to customers (Q2), questions 124 and 125.1.
402   Questionnaire to competitors (Q1), question 104.
                                                       80
 ---pagebreak--- (514)    Finally, the Commission found that the Transaction does not raise serious doubts as
         to its compatibility with the internal market on the plausible markets for private
         label ricotta in the UK as well as branded ricotta in the UK.
(515)    In conclusion, in light of the above and based on the information available to the
         Commission and provided by Parties, the Commission considers that the
         Transaction does not raise serious doubts as to its compatibility with the internal
         market on the overall market for ricotta in the United Kingdom.
5.6.4. Mascarpone
(516)    Both Lactalis and Nuova Castelli supply branded and private label mascarpone in
         the UK. In light of this, the Commission will assess the likely effects of the
         Transaction on each of the branded and private label segments, as well as on the
         overall market for mascarpone in the UK.
(517)    As outlined in the Market Definition section in section 4.3.2, the market for the
         supply of mascarpone to retailers is a differentiated market across sales channels,
         where suppliers can compete in branded and in private label cheese. Although the
         presence of suppliers in the same sales channel will be indicative of closeness of
         competition between them, the pricing of private label products will have some
         effect on the pricing ability in the branded side of the market.
       (A)        Branded mascarpone in the United Kingdom
(518)    First, the Commission notes that the third party data relied on by the Commission
         to establish the market shares of the Parties and their competitors does not indicate
         an overlap for the supply of branded mascarpone.
(519)    An overlap between the Parties activities was only identified because actual supply
         data from the Parties suggested an actual delivery of very minor quantities by
         Nuova Castelli to the UK in 2018 ([…]) of branded mascarpone.403 Accordingly,
        based on the market share data submitted by the Parties, if potentially relevant
        segment for branded mascarpone was considered, the combined market shares of
        the       Parties    would        be      [150-160]% (Lactalis: [130-140]%; Nuova
        Castelli [20-30]%).404
(520)    However, the Commission notes that third party data, as explained in Section 5.2,
        does not specify small sales and does not track all outlets in the retail channel. In
        light of this and the calculated figure by the Parties which exceeds 100%, the
        market shares of the Parties are likely overestimated. In particular, similarly to
        Nuova Castelli, other suppliers, which constitute a competitive pressure on the
        Parties, are likely not recorded by the same data sources that do not record Nuova
        Castelli. There are no other suppliers of branded mascarpone recorded by the third-
        party data.
(521)   Moreover, the very low increment to the market shares, which corresponds, as
        explained above, to de minimis sales of […] in the entire year 2018, further
        corroborates the very limited importance of Nuova Castelli as a constraint in the
        plausible branded product market.
(522)   The Commission also observes that the branded segment in the overall market for
        mascarpone has less than [5-10]% share, which would indicate that the main
403    The Parties response to the Commission’s request for information RFI 22.
404    The value market shares for branded segment are in line with the volume shares provided by the
       Parties, and both overstate the Parties’ position compared to panel data.
                                                          81
 ---pagebreak---         competitive constraint in the market comes from private label mascarpone,
        irrespective of whether it belongs to the same market or it is assessed as a
        constraint from outside the market. For example, some retailers in the UK do not
        even carry branded products and cover the whole demand with private label Italian
        cheese.405
(523)   In light of the above, the Commission considers that the Transaction will not
        substantially modify the market structure and will not remove a significant
        competitive constraint for branded mascarpone in the UK.
(524)   In its assessment of this plausible market the Commission also considered the
        arguments presented in the below section as regards the overall market, and in
        particular concerning the absence of significant barriers to entry and expansion, as
        well as the Nuova Castelli’s competitive position limited to trading activity, other
        available suppliers, and the impact of the Transaction.
(525)   In conclusion and based on the information available to the Commission and
        provided by Parties, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        plausible market of branded mascarpone in the UK.
      (B)         Private label mascarpone in the United Kingdom
(526)   For the supply of private label mascarpone, based on the Parties’ estimates using
        downstream market share at retail level as a proxy to estimate market shares at
        procurement level406 , their combined market shares in volume terms in 2018 would
        be [50-60]% (Lactalis: [20-30]%; Nuova Castelli: [30-40]%).
(527)   The Commission considers that despite large market shares of the Parties post-
        Transaction, it is not likely that the Transaction will give rise to serious doubts for
        the following reasons.
(528)   First, as explained above, in the UK, private label covers almost all the demand for
        mascarpone ([90-100]%). While the Parties post-Transaction will likely be the
        leading suppliers of private label mascarpone, the merged entity will continue to
        face significant competitive pressure from other private label suppliers, which,
        according to the third party data, accounted for more than […] (or for over
        [40-50]% of the overall demand). The Parties estimate that the leading supplier of
        private label mascarpone in the UK is Sterilgarda with a market share of
        [60-70]%,407 Latte Montagna Alto Adige ([10-20]%), and Lattebusche-
        Latteria ([0-5]%).408
405   Non-confidential version of minutes of a call with a customer, 26 September 2019; see also
      Questionnaire Q2, question 99.1.
406   Parties’ response to Commission’s request for information RFI 22.
407   As explained in Section 5.2.2, the Notifying Party used third-party panel data to establish the market
      size for private label supply. However, given that such panel data does not capture all retailers, and
      the Notifying Party considers that it is even less reliable for small product markets, it is likely that the
      market shares of Lactalis and Nuova Castelli are overstated. In view of this and following the market
      share methodology proposed by the Notifying Party, the combined market share is [50-60]%.
      However, the Notifying Party believes that their market share is overstated and estimates that
      Sterilgarda is likely to have a leading market position, which is not in line with the estimated market
      share of other players (remaining [40-50]% of the market) using the Notifying Party’s market share
      methodology. Parties’ response to Commission’s request for information The Parties response to the
      Commission’s request for information RFI 22 and Annex RFI 22-2-4, paragraph 62.
408   Parties’ response to Commission’s request for information RFI 22 and Annex RFI 22-2-4,
      paragraph 62.
                                                        82
 ---pagebreak--- (529)   Second, while one UK customer indicated that, in case of a price increase
        following the Transaction, it could not quickly switch to an alternative supplier
        with a comparable product range and sufficient volumes of private label
        mascarpone, the same customer also submitted that it is possible to switch to a
        different supplier of mascarpone.409 In addition, the finding that switching is
        possible can also be supported by the response of another UK customer that
        indicated to have switched a private label supplier in the last three years in a
        competitive process.410
(530)   In its assessment of this plausible market, the Commission also considered the
        arguments presented in the below section as regards the overall market, and in
        particular concerning the absence of significant barriers to entry and expansion, as
        well as the Nuova Castelli’s competitive position limited to trading activity, and the
        impact of the Transaction.
(531)   In conclusion and based on the information available to the Commission and
        provided by Parties, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        plausible market of branded mascarpone in the UK.
      (C)        Overall market for mascarpone in the United Kingdom
(532)   As outlined by the market shares, the overlap between the Parties in mascarpone in
        the UK occurs in the segment for the supply of private label products. Based on the
        market share data submitted by the Parties and in light of the methodology
        described in Section 5.2, the combined market shares of the Parties in branded and
        private label in volume terms in 2018 were: [60-70]% (Lactalis: [20-30]%; Nuova
        Castelli: [30-40]%).
                                                Table 15
                              United Kingdom 2018, Mascarpone411
                     Branded and private label – Adjusted market shares
                          Competitor                   Sales, tons        Market Share
              Lactalis - branded                            [...]              [0-5]%
              Lactalis – private label                      [...]            [20-30]%
              Nuova Castelli - branded                      [...]              [0-5]%
              Nuova Castelli – private label                [...]            [30-40]%
              Combined Parties PL + B                      […]               [60-70]%
              Others – private label                       […]               [40-50]%
              Total sales                                  1370                 100%
              Note: Internal sales were inserted as there was no entry in the panel.
              The sales were reduced to match the unspecified difference in the
              panel
409   Questionnaire to customers (Q2), questions 92 and 93.2.
410   Questionnaire to customers (Q2), questions 91 and 91.1.
411   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
                                                       83
 ---pagebreak--- (533)   However, even though the concentration gives rise to large combined market
        shares of the Parties, the Commission considers that the Transaction does not raise
        serious doubts for the supply of mascarpone to retailers in the UK for the following
        reasons.
(534)   First, following the Transaction, the merged entity will continue to face significant
        competitive pressure from several private label suppliers, which, based on 2018
        data, accounted for [40-50]% of the overall demand for mascarpone.
(535)   Second, none of the customers responding to the Commission's market
        investigation suggested that it was not possible to switch to different supplier of
        mascarpone.412 When asked if there are any significant barriers to the entry or
        expansion for mascarpone in terms of costs and time, none of the customers from
        the UK indicated that there were any barriers.413
(536)   Third, as outlined above Nuova Castelli does not produce mascarpone but only
        trades mascarpone produced by a third-party manufacturer […], which indicates
        that the position of Nuova Castelli on the UK market may easily change as it
        depends on whether Nuova Castelli’s supplier will be willing to extend the
        contract. […] (See paragraph (363)).
(537)   Fourth, in line with the arguments set out in paragraph (474), the Commission
        considers that there are no significant entry or expansion barriers to the market for
        mascarpone in the UK, in particular as it is a small market (see Table 15) and
        where the organization of distribution through agents is even easier for smaller than
        for larger volumes414 .
(538)  Accordingly, given that the main competitive interaction is in the private label
       segment for the supply of mascarpone and that the entry into private label segment
       does not entail risk comparable to the entry into branded segment, does not incur
       brand development cost, the suppliers of mascarpone in other EEA countries415 ,
       such as Granarolo (active e.g. in France, Portugal, the Netherlands), Ambrosi
       (e.g. France), could likely quickly and without incurring significant cost enter the
       UK market. The finding for mascarpone is particularly informed by the
       circumstance that even limited deliveries of the product by these suppliers would
       result in an important decrease in shares for the Parties.
(539)   Fifth, while overall, during the market investigation few customers in the UK
        expressing their views were concerned about Italian-type cheeses, no substantiated
        concerns were formulated in relation to the supply of mascarpone.416
(540)   Finally, the Commission found that the Transaction does not raise serious doubts as
        to its compatibility with the internal market on the plausible markets for branded
        mascarpone in the UK as well as private label mascarpone in the UK.
(541)   Based on the above considerations and in the light of the results of the market
        investigation, the Commission considers that the Transaction does not raise serious
        doubts as to its compatibility with the internal market on the overall market of
        mascarpone in the UK.
412   Questionnaire to customers (Q2), question 92.
413   Questionnaire to customers (Q2), question 96.
414   Non-confidential version of minutes of a call with a customer, 26 September 2019.
415   Parties’ response to Commission’s request for information RFI 23.
416   Questionnaire to customers (Q2), questions 124 and 125.1.
                                                       84
 ---pagebreak--- 5.6.5. Gorgonzola
(542)    Lactalis supplies branded Gorgonzola to retailers in the United Kingdom, whereas
         Nuova Castelli supplies only private label Gorgonzola to retailers in the United
         Kingdom. The Parties’ activities in relation to Gorgonzola in the United Kingdom
         give rise to an affected market only if the overall market including branded and
         private label was considered.
       (A)        Overall market for Gorgonzola in the United Kingdom
(543)    Based on the market share data submitted by the Parties and in light of the
         methodology described in Section 5.2, the combined Adjusted market shares of the
         Parties in branded and private label in volume terms in 2018 were [50-60]%
         (Lactalis: [40-50]%, Nuova Castelli: [10-20]%).
                                                     Table 16
                      United Kingdom 2018, Gorgonzola - incl. variable 417
                      Branded and private label – Adjusted market shares
               Competitor                              Sales, tons        Market Share
               Lactalis - branded                           […]               [40-50]%
               Nuova Castelli – private label               […]               [10-20]%
               Combined Parties PL + B                      […]               [50-60]%
               Granarolo                                    […]                [0-5]%
               Arrigoni                                     […]                [0-5]%
               Deli Co                                      […]                [0-5]%
               Others – private label                       […]               [30-40]%
               Total sales                                  510                 100%
(544)    Although, following the Transaction the Parties will have large combined market
         shares, the Commission considers that the concentration does not raise serious
         doubts for the supply of Gorgonzola in the UK for the following reasons.
(545)    First, the private label Gorgonzola has a large share in the overall market in the UK
         ([50-60]%) with several strong suppliers, which exerts a competitive constraint on
         the branded label suppliers.
(546)    As regards the private label supply of Gorgonzola, the Commission notes that other
         private label suppliers put on the market more than double the volumes supplied by
         Nuova Castelli. Based on the Parties data, the main competitors in the private label
         segment are Igor ([50-60]% of the overall market), Arrigoni Battista ([10-20]%),
         Acquistapace ([5-10]%), and Emilio Mauri ([0-5]%).
(547)    Second, the Commission notes that the Parties are active in different segments of
         the market, which would indicate that they are not close competitors. While
         Lactalis is the leading supplier of branded Gorgonzola it competes closer to other
         suppliers of branded Gorgonzola products than for the supply of private label
         cheese.
417    For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
       the plausible market of branded goods, as well as for the branded and private label goods market
       combined. As detailed panel data for private label is unavailable, the separate shares for private label
       are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
       Parties’ presence in private label products.
                                                        85
 ---pagebreak--- (548)    Third, the production of Gorgonzola is regulated by quotas of membership in the
         consortium and consortium controls the production levels.418 The Notifying Party
         explains that the production of Gorgonzola in Italy and the exports of Gorgonzola
         outside of Italy are largely dominated by the market leader Igor, which accounts for
         [40-50]% of the total production of Gorgonzola and [60-70]% of the total exports
         outside of Italy. By comparison, Lactalis and Nuova Castelli respectively account
         for [10-20]% and [0-5]% of the total production of Gorgonzola. Likewise, they
         respectively account for only [10-20]% and [0-5]% of the total exports outside of
         Italy.419
(549)    As a consequence, the Parties account for a limited part of the production and
         exports outside of Italy, so that any retailer located in the UK can find alternative
         sources for the supply of Gorgonzola.
(550)    Fourth, in line with the arguments set out in paragraph (474), the Commission
         considers that there are no significant entry or expansion barriers to the market for
         Gorgonzola in the UK, in particular as it is a small market and where the
         organization of distribution through agents is even easier for smaller than for larger
         volumes420 . In particular, given that entry into private label segment does not entail
         risk comparable to the entry into branded segment because the supplier would not
         incur brand development costs, the suppliers of Gorgonzola in other EEA
         countries, such as Vivaldi and Ambrosi (both active e.g. in France) could likely
         quickly and without incurring significant cost enter the UK market. The finding for
         Gorgonzola is particularly informed by the circumstance that even limited
         deliveries of the product by these suppliers would result in an important decrease in
         shares for the Parties combined.
(551)    While overall, during the market investigation few customers in the UK expressing
         their views were concerned about Italian-type cheeses, they have not raised any
         substantiated concerns in relation to the supply of Gorgonzola.421 In addition, a
         third party stated that the Transaction “will not have a negative impact on […] the
         overall market of Gorgonzola.”422
(552)    Based on the above considerations and in the light of the results of the market
         investigation, the Commission considers that the concentration does not raise
         serious doubts as to its compatibility with the internal market on the overall market
         for Gorgonzola in the UK.
5.6.6. Italian-type hard cheese
(553)    Lactalis supplies only branded Italian-type hard cheeses, whereas Nuova Castelli
         supplies mainly private label and to some limited extent branded Italian-type hard
         cheeses to retailers in the United Kingdom (the UK). In light of this, the
         Commission will assess the likely effects of the Transaction on the branded
         segment, as well as on the overall market for Italian-type hard cheese in the UK.
418    Non-confidential version of minutes of a call with a third party, 24 July 2019.
419    Parties’ Briefing Memorandum of 17October 2019 – Paragraph 61.
420    Non-confidential version of minutes of a call with a customer, 26 September 2019.
421    Questionnaire to customers (Q2), question 124.
422    Courtesy translation from the Italian: “…non ritiene che l’Acquisizione avra’ un impatto negativo
       […] sul mercato del Gorgonzola”, Non-confidential version of minutes of a call with a third party,
       24 July 2019.
                                                        86
 ---pagebreak---       (A)        Branded Italian-type hard cheeses in the United Kingdom
(554)   First, if only the segment of branded Italian-type hard cheese was considered,
        where the only overlap is, based on the Commission’s Adjusted market shares
        methodology, the Parties’ combined market shares in volume terms in 2018 would
        be [30-40]% (Lactalis: [5-10]%; Nuova Castelli: [20-30]%).423 The low increment
        of [5-10]% to the market shares represents minimal recorded sales of Lactalis of
       […] in the entire year 2018 and also indicates low significance of Lactalis as a
       competitive constraint in the plausible branded product market.
(555)  Second, following the Transaction the Parties will continue to face competitive
       constraints from several credible competitors. Based on the third-party data (see
       Table 17), there are several other suppliers of branded Italian-type hard cheese in
       the UK: Napolina, Colla, Trentin among others. While these suppliers do not have
       a large presence in the market (market shares of each of them is below [0-5]%), the
       recorded volumes of Lactalis are nonetheless the smallest ([…] per year, less than
       half compared to other Italian-type cheese manufacturers Trentin and Colla). This
       would further support the finding that Lactalis has a very limited importance as a
       constraint in the branded product segment, as well as in the overall market.
(556)  Third, competition for Italian-type hard cheeses, which encompass products
       covered by a Protected Denomination of Origin, is less affected by brand presence
       in view of the predominant role carried by such denominations (Parmigiano
       Reggiano, Grana Padano). Therefore, it makes the assessment of a market only
       consisting of branded product much less significant in this context. In particular,
       the Parties submitted that brands carry little weight as the selling point is mostly
       the PDO branding. The presence of the PDO logos on a cheese wheel or bag of
       Parmigiano Reggiano ensures and indicates to the consumer that this cheese is
       produced, and the milk collected, exclusively in the PDO area, delivering
       recognition and quality perception expected from a brand. In line with this one
       competitor also explained: “The PDO brands enjoy high notoriety that it takes
       away “space” from private brands and indirectly attracts attention of private
       labels”.424
(557)   In light of the above and in particular given the very limited activities of Lactalis,
        the Commission considers that the Transaction will not substantially modify the
        market structure and will not remove a significant competitive constraint for
        branded Italian-type- hard cheese in the UK.
(558)   In its assessment of this plausible market, the Commission also considered the
        arguments presented in the below section as regards the overall market, and in
        particular concerning the market structure, availability of alternative suppliers,
        absence of significant barriers to entry and expansion, and the limited competitive
        position of Lactalis.
423   The combined value market shares for branded segment are slightly higher (by less than 5 percentage
      points) the volume shares provided by the Parties and overstate the Parties’ position compared to
      panel data.
424   Courtesy translation from the Italian: “Il valore del brand DOP è talmente forte che toglie "spazio" ai
      Brand privati e, indirettamente, stimola l'attenzione delle private labels”; Questionnaire (Q1),
      question 128.1.
                                                         87
 ---pagebreak--- (559)   In conclusion and based on the information available to the Commission and
        provided by Parties, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        plausible market of branded Italian-type hard cheeses in the UK.
      (B)        Overall market for Italian-type hard cheese in the United Kingdom
(560)   On the overall market for Italian-type hard cheese in the UK, based on the market
        share data submitted by the Parties and in light of the methodology described in
        Section 5.2, the combined market shares of the Parties in volume terms in 2018
        were: [40-50]% (Lactalis: [0-5]%; Nuova Castelli: [40-50]%), with a very limited
        increment of [0-5]%.
                                                Table 17
                      United Kingdom 2018, Italian-type hard cheese425
                     Branded and private label – Adjusted market shares
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]                [0-5]%
              Nuova Castelli - branded                     […]                [0-5]%
              Nuova Castelli – private label               […]               [40-50]%
              Combined Parties PL + B                      […]               [40-50]%
              Napolina                                     […]                [0-5]%
              Cook Italian                                 […]                [0-5]%
              Colla                                        […]                [0-5]%
              Trentin                                      […]                [0-5]%
              Bio                                          […]                [0-5]%
              Others – private label                       […]               [50-60]%
              Total sales                                 4845                 100%
              Note: Internal branded sales were inserted for Nuova Castelli as there
              was no entry in the panel. The branded sales were reduced to match
              the unspecified difference in the panel
(561)   Although, post-Transaction the Parties will have moderate combined market
        shares, the Commission considers that the Transaction does not raise serious doubts
        for the supply of Italian-type hard cheese in the UK for the following reasons.
(562)   First, as the market shares indicate (Table 17), Lactalis has only very limited
        activities in the UK for the supply of Italian-type hard cheeses. Therefore, the
        increment brought by the Transaction ([0-5]%) is negligible and would likely not
        affect the market structure.
(563)   Second, the market structure for the supply of Italian-type hard cheeses in the UK
        suggests that the main competitive constraints come from the private label
        segment, which has a [90-100]% share of the overall market. The Parties activities
        do not overlap in this segment. Furthermore, even though Nuova Castelli is a big
        supplier of private label products (estimated market share of [40-50]%), there are
425   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
                                                       88
 ---pagebreak---        other important and viable suppliers of private label products covering [50-60]% of
       the overall demand. Based on the Parties data, the other suppliers are Consorzio
       Virgilio [20-30]%; Colla: [10-20]%;                 Latteria Sociale Mantova: [10-20]%;
       Parmareggio [0-5]%; and Agriform: [0-5]%.
(564)  Third, Lactalis depends on the supply from other manufacturers, such as […] or
       […], for its trading activity of Italian-type hard cheeses.426 The Notifying Party
       explained that it does not have any written agreement or volume commitment for
       buying Italian-type hard cheeses from its suppliers and relies on a long-term
       partnership.427
(565)  Fourth, the Commission notes that Lactalis traded volumes of Italian-type hard
       cheeses in the UK are very small and decreased by [20-30]% over the last three
       years.428 The Commission also notes that, for example, […] is already present in
       the UK, and could therefore expand its presence with the retailers at the expense of
       Lactalis.
(566)  Fifth, with reference to the limited quantities supplied by Lactalis as a trader of
       these products in the UK, there exist several other competitors who compete not
       only in the trading, but also as producers of PDO cheeses within Italian hard
       cheeses because they either have quotas in consortia (Grana Padano) or obtain milk
       from consortia (Parmigiano Reggiano). The Parties do not overlap in this respect,
       as Lactalis is not active in the production of PDO cheese and Nuova Castelli has
       limited overall shares of production in relation to PDO cheeses. Accordingly, also
       in view of this, Lactalis and Nuova Castelli are not close competitors.
(567)  Sixth, different from other Italian-type cheeses, Lactalis is not recognised as an
       important player with respect to Italian-type hard cheese. No customers from the
       UK or competitors responding to the market investigation mentioned Lactalis
       among main or alternative suppliers of Italian-type hard cheese in the UK.429
       Competitors responding to the market investigation mentioned Nuova Castelli,
       Zanetti, Colla and Dalter, Cascine Emiliane.430 The Commission notes that the
       internal document of the Notifying Party also suggests that Lactalis does not exert
       an effective competitive constraint on the market for Italian-type hard cheese. For
       example, Lactalis in one of the presentations considers: "Out of Italy the most
       important category is Parmesan where Galbani has low market share due to its
       limited competitiveness in terms of Price".431
(568)  Seventh, the Commission considers that it cannot be excluded that companies
       active in other national markets could potentially expand their activities in the UK.
       In this regard, the Parties submitted that competitors in Italian-type hard cheese
       could easily expand and gain market shares in national markets, in particular
       referring to companies such as Zanetti, Ambrosi, Colla, Parmareggio.432 The
       majority of all customers expressing their views in the market investigation
       suggested that there are no significant entry or expansion barriers in terms of cost
      Form CO, paragraph 360, see also Parties’ response to the Commission’s request for information
      RFI 14, question 1, 5.
427   Form CO, paragraph 365.
428   Form CO, paragraph 359.
429   Questionnaire to customers (Q2), question 107; Questionnaire to competitors (Q1), question 130.
430   Questionnaire to competitors (Q1), question 130.
431   Form CO, Annex 5.2.H.
432   Form CO, paragraph 1060.
                                                       89
 ---pagebreak---         and time.433 The Commission notes that in the market investigation a third-party
        has also indicated that in recent years there indeed have been several new entries
        into the national markets of companies who previously only had been active in
        Italy.434
(569)   Eighth, while during the market investigation few customers in the UK expressing
        their views were overall concerned about Italian-type cheeses, no substantiated
        concerns were formulated in relation to the supply of Italian-type hard cheese.435
        Further, one UK customer explained that it does not expect the Transaction to have
        any impact in relation to the supply of Italian-type hard cheese: “However, Lactalis
        have a limited presence in the Italian Hard Cheese market, so one would anticipate
        there being only marginal impact on this area of Italian cheese sales and most this
        would maintain it's existing framework.”436
(570)   Finally, the Commission found that the Transaction does not raise serious doubts as
        to its compatibility with the internal market on the plausible market for branded
        Italian-type hard cheeses in the UK.
(571)   Based on the above considerations and in the light of the results of the market
        investigation, the Commission considers that the Transaction does not raise serious
        doubts as to its compatibility with the internal market on the overall market for
        Italian-type hard cheeses.
5.7.   Germany
(572)   Based on the market share data submitted by the Parties and in light of the
        methodology used (see Section 5.2), the Transaction gives rise to the following
        horizontally affected plausible markets in Germany: Buffalo milk mozzarella
        (Section 5.7.1); ricotta (Section 5.7.2) and mascarpone (Section 5.7.3).
5.7.1. Buffalo milk mozzarella
(573)    Lactalis supplies only branded buffalo milk mozzarella, whereas Nuova Castelli
         supplies branded and private label buffalo milk mozzarella in Germany.
       (A)        Branded buffalo milk mozzarella in Germany
(574)    For branded buffalo milk mozzarella, following the Commission’s methodology
         described in Section 5.2, the Adjusted combined market share of the Parties
         in 2018 in Germany was [30-40]% (in volume), with a moderate increment of
         Lactalis’ market share of [5-10]% due to Nuova Castelli’s moderate brand
        presence.437
(575)   First, Nuova Castelli had moderate sales of branded buffalo milk mozzarella in
        Germany in 2018 ([…]) and thus does not enjoy strong brand presence. The
        Transaction will bring a moderate increment to Lactalis’ market share of [5-10]%.
(576)   Second, after the Transaction, the merged entity will continue to face significant
        competitive pressure from the strongest competitor to Lactalis, Sori. According to
        the data provided by the Parties and based on the Commission’s analysis (see
        Section 5.2), in 2018 Sori represented a stronger competitive constraint than Nuova
433    Questionnaire to customers (Q2), question 113
434    Questionnaire to competitors (Q1), question 135.1.
435    Questionnaire to customers (Q2), questions 124 and 125.1.
436    Questionnaire to customers (Q2), question 18.
437    The combined value market shares for branded segment are slightly higher (less than 5 percentage
       points) the volume shares provided by the Parties.
                                                        90
 ---pagebreak---         Castelli with regard to branded buffalo milk mozzarella in Germany. Sori’s sales of
        branded buffalo milk mozzarella were significantly higher than Nuova Castelli’s
        sales and accounted for [30-40]% of the overall market of buffalo milk mozzarella
        in Germany (see Table 18 below).
(577)   Third, the merged entity will also continue to face competitive constraints from
        several smaller suppliers of branded buffalo milk mozzarella that will remain in the
        German market post-Transaction. These suppliers accounted for [10-20]% of the
        overall market for buffalo milk mozzarella in Germany in 2018 (see Table 18
        below).
(578)   In its assessment of       this plausible market the Commission has also considered the
        arguments presented         in the below section as regards the overall market, and in
        particular concerning       the availability of other suppliers and the lack of closeness
        between the Parties          that also apply to the assessment of branded buffalo milk
        mozzarella.
(579)   In conclusion, based on the information available to the Commission and provided
        by Parties, the Commission finds that the Transaction does not raise serious doubts
        as to its compatibility with the internal market with regard to the plausible market
        of branded buffalo milk mozzarella in Germany.
      (B)        Overall market of buffalo milk mozzarella in Germany
(580)   Based on the market share data submitted by the Parties and in light of the
        methodology described in Section 5.2, the combined Adjusted market shares of the
        Parties in branded and private label buffalo milk mozzarella in Germany in 2018
        were: [20-30]% (in volume, Lactalis: [20-30]%; Nuova Castelli: [0-5]%).
                                                     Table 18
                            Germany 2018, Buffalo milk mozzarella438
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]               [20-30]%
              Nuova Castelli - branded                     […]                [0-5]%
              Combined Parties PL + B                      […]               [20-30]%
              Private label                                […]               [30-40]%
              Sori                                         […]               [30-40]%
              Others - branded                             […]               [10-20]%
              Total sales                                 2740                 100%
              Note: Internal branded sales were inserted for Nuova Castelli as there
              was no entry in the panel
(581)   The Transaction results in an affected market because of Lactalis’ market presence
        with branded products, with brands such as Galbani. Nuova Castelli has a more
        limited presence in the overall market for buffalo milk mozzarella in Germany,
        bringing a moderate increment of [0-5]% to Lactalis’ market share .
438   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
                                                       91
 ---pagebreak--- (582)    Beside the considerations concerning the competitive landscape and shares of the
         market for buffalo milk mozzarella in Germany, the Commission considers that the
         Transaction does not raise serious doubts for the following reasons.
(583)    First, the merged entity will also continue to face competitive constraints from Sori
         and several branded and in private label competitors that already supply retailers in
         Germany. These suppliers accounted for [70-80]% of the overall market for
         branded buffalo milk mozzarella in Germany in 2018 (see Table 18 above).
(584)    Second, the Commission considers that the Parties are not close competitors for the
         supply of buffalo milk mozzarella in Germany. The Commission notes that Nuova
         Castelli produces and trades private label buffalo milk mozzarella.439 However,
         Lactalis does not manufacture buffalo milk mozzarella but merely trades under its
         own brand.
(585)    Third, based on the data provided by the Parties, Lactalis trades buffalo milk
         mozzarella manufactured by third parties, including […].440 The Notifying Party
         submits that its contracts with these suppliers, including volumes, are negotiated on
         a yearly basis.441 The Commission notes that […] already has access to German
         retailers and its contract with Lactalis is not long-term. Accordingly, if post-
         Transaction, the merged entity increased prices, […] could likely quickly increase
         supplies to Germany.
(586)    Finally, the Commission found that the Transaction does not raise serious doubts as
         to its compatibility with the internal market on the plausible market for branded
         buffalo milk mozzarella in Germany.
(587)    Based on the above considerations and in the light of the results of the market
         investigation, the Commission considers that the Transaction does not raise serious
         doubts as to its compatibility with the internal market on the overall market for
         buffalo milk mozzarella in Germany.
5.7.2. Ricotta
(588)    Lactalis and Nuova Castelli are active in the market for ricotta in Germany. Both
         Parties sell branded ricotta but only Nuova Castelli also sells private label ricotta.
       (A)        Branded ricotta in Germany
(589)    For branded ricotta, the combined Adjusted market share of the Parties in 2018 in
         Germany was [70-80]% (in volume), with a moderate increment of Nuova
         Castelli’s market share of [5-10]% in view of Nuova Castelli’s moderate brand
         presence.442
(590)    First, Nuova Castelli had moderate sales of branded ricotta in Germany in 2018
         ([…]) and thus does not enjoy strong brand presence. The Transaction will bring a
         moderate increment of [5-10]% to Lactalis’ market share.
439    Form CO, paragraph 360.
440    Form CO, paragraph 360.
441    Form CO, paragraph 365.
442    The combined value market shares for branded segment are slightly higher (by less than 5 percentage
       points) than the volume shares provided by the Parties, and both overstate the Parties’ position
       compared to panel data.
                                                     92
 ---pagebreak--- (591)   Second, after the Transaction, the merged entity will continue to face significant
        competitive pressure from the strongest competitor to Lactalis, Trentin. According
        to the data provided by the Parties and based on the Commission’s analysis (see
        Section 5.2), in 2018 Trentin represented a stronger competitive constraint than
        Nuova Castelli with regard to branded ricotta in Germany. Trentin’s sales of
        branded ricotta were significantly higher than Nuova Castelli’s sales and accounted
        for [5-10]% of the overall ricotta market in Germany (see Table 19 below).
(592)   Third, the merged entity will also continue to face significant competitive
        constraints from two other branded suppliers: Goldsteig and Bustaffa which in
        2018 had combined sales of branded ricotta comparable to those recorded for
        Nuova Castelli (see Table 19 below). Moreover, several additional smaller
        suppliers of branded ricotta will remain in the German market post-Transaction.
        These suppliers accounted for [0-5]% of the overall market for ricotta in Germany
        in 2018 (see Table 19 below).
(593)   Fourth, with regard to the ability of customers to switch suppliers of ricotta, the
        majority of customers that responded to the market investigation considered they
        could not quickly switch to an alternative supplier of branded ricotta with a
        comparable range and sufficient quantities;443 however, the majority of competitors
        and customers that expressed a view indicated that it was possible and even easy to
        switch suppliers of ricotta.444
(594)   In its assessment of this plausible market the Commission has also considered the
        arguments presented in the below section as regards the overall market, and in
        particular concerning the absence of significant barriers to entry and expansion, the
        availability of other suppliers and the impact of the Transaction that also apply to
        the assessment of branded ricotta.
(595)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the plausible market of branded ricotta in Germany.
      (B)        Overall market for ricotta in Germany
(596)   Based on the Commission’s methodology, Adjusted market shares for the overall
        market for ricotta in Germany are as follows.
443   Questionnaire to customers (Q2), question 84.1.
444   Questionnaire to competitors (Q1), question 100; Questionnaire to customers (Q2), question 83.
                                                      93
 ---pagebreak---                                                     Table 19
                                      Germany 2018, Ricotta445
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]               [40-50]%
              Nuova Castelli - branded                     […]                 [0-5]%
              Nuova Castelli – private label               […]                 [0-5]%
              Combined Parties PL + B                      […]               [50-60]%
              Trentin                                      […]                [5-10]%
              Goldsteig                                    […]                 [0-5]%
              Bustaffa                                     […]                 [0-5]%
              Others - branded                             […]                 [0-5]%
              Others – private label                       […]               [30-40]%
              Total sales                                 1296                  100%
(597)   The Transaction results in an affected market because of Lactalis’ large market
        presence with branded products, with strong and widely recognised brands, such as
        Galbani. Nuova Castelli has a more limited presence in the overall market for
        ricotta in Germany, bringing a moderate increment of Nuova Castelli’ market share
        of [5-10]%.
(598)   Beside the considerations concerning the shares of the market for ricotta in
        Germany, the Commission considers that the Transaction does not raise serious
        doubts for the following reasons.
(599)   First, after the Transaction, the merged entity will continue to face significant
        competitive pressure from Trentin as well as from more than two branded and
        private label competitors, which accounted for [40-50]% of the overall market for
        ricotta in Germany. These competitors are likely to continue exercising competitive
        pressure on the merged entity comparable to the pressure exercised by Nuova
        Castelli on Lactalis pre-Transaction.
(600)   Second, with regard to the ability of customers to switch suppliers of ricotta, while
        the majority of customers that responded to the market investigation had not
        switched suppliers of branded or private label ricotta in the last three years,446 the
        majority of competitors and customers that expressed a view indicated that it was
        possible and even easy to switch suppliers of ricotta.447
(601)   Third, concerning barriers to entry and expansion, the majority of the respondents
        to the market investigation that expressed a view indicated that there were not
        significant barriers to entry or expansion in terms of costs and time.448
445   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
446   Questionnaire to customers (Q2), questions 81 and 82.
447   Questionnaire to competitors (Q1), question 100; Questionnaire to customers (Q2), question 83.
448   Questionnaire to Competitors (Q1), questions 87 and 102.
                                                       94
 ---pagebreak--- (602)   Moreover, different from other fresh cheese products discussed above for which
        access to milk has been assessed as a potential barrier to entry, ricotta is produced
        from a by-product of other cheese production. In particular, as explained by the
        Notifying Party, ricotta is manufactured by heating whey to 80° C. The market
        investigation confirmed that ricotta is by-product of whey,449 which is a liquid
        derived from the production of soft and fresh cheese (e.g. mozzarella)450 . The
        Parties use their leftovers of whey to produce ricotta as well as milk powder.
        Nuova Castelli also sells part of its whey to third parties.
(603)   Furthermore, in 2018, there were more than four competitors (besides the Parties)
        active in the overall market for ricotta and at least one competitor indicated that it
        could increase its production of ricotta without incurring in significant additional
        costs.451
(604)   Fourth, one competitor indicated that as a result of the Transaction, it expects
        prices for ricotta to decrease in Germany.452 With regard to German customers, the
        market investigation was inconclusive.453
(605)   Finally, the Commission found that the Transaction does not raise serious doubts as
        to its compatibility with the internal market on the plausible market for branded
        ricotta in Germany.
(606)    In conclusion, in light of the above and based on the information available to the
         Commission and provided by Parties, the Commission considers that the
         Transaction does not raise serious doubts as to its compatibility with the internal
         market on the overall market for ricotta in Germany.
5.7.3. Mascarpone
(607)    Both Parties supply branded mascarpone in the Germany, but only Lactalis
         supplies private label. Based on the information provided by the Notifying Party,
         Nuova Castelli does not produce, but only trades, branded mascarpone. It
         purchases […] of its requirements from […] and resells it as further developed in
         paragraphs (368) to (369).
       (A)        Branded mascarpone in Germany
(608)    First, Nuova Castelli had very limited sales of branded mascarpone in Germany
         in 2018. The Transaction will bring a limited increment to Lactalis’ market share.
(609)    Second, the Commission notes that the third party data relied on by the
         Commission to establish the Adjusted market shares of the Parties and their
         competitors point at a very minimal overlap for the supply of branded mascarpone.
(610)    Based on the Adjusted market share data, if potentially relevant segment for
         branded mascarpone was considered, the combined Adjusted market shares of the
         Parties would be [50-60]% (Lactalis: [40-50]%; Nuova Castelli [5-10]%).454
449    Questionnaire to competitors (Q1), question 15.
450    Questionnaire to competitors (Q1), question 15.1.
451    Questionnaire to competitors (Q1), question 102.1.
452    Questionnaire to competitors (Q1), question 104.
453    Questionnaire to customers (Q2), questions 123 and 124.
454    The combined value market shares for branded segment are higher (by less than 10 percentage
       points), but result in a smaller increment than the volume shares provided by the Parties, and both
       overstate the Parties’ position compared to panel data.
                                                         95
 ---pagebreak--- (611)   However, the Commission notes that third party data, as explained in Section 5.2,
        does not record small sales and does not track all outlets in the retail channel. In
        particular, similarly to Nuova Castelli, other suppliers, which constitute a
        competitive pressure on the Parties, are likely underestimated by the same data
        sources that record very minimal sales from Nuova Castelli.
(612)   Third, the Commission also observes that the branded segment in the overall
        market for mascarpone has below [20-30]% share of the overall market, which
        would indicate that the main competitive constraint in the market comes from
        private label mascarpone, irrespective of whether it belongs to the same market or
        it is assessed as a constraint from outside the market.
(613)   Fourth, the merged entity will continue to face significant competitive constraints
        from four other branded suppliers (Goldsteig, Minus L, De Lucia, and Exquisa).
        Considering reported sales three of them are roughly the same size as Nuova
        Castelli and one of them, Goldsteig, is 3 times bigger.
(614)   The Commission has also considered in its assessment that the arguments presented
        in the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion, the availability of other
        suppliers and lack of barriers to switching with respect to this plausible market also
        apply to the assessment of branded mascarpone.
(615)   In view of the above, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        branded mascarpone.
      (B)         Overall market for mascarpone in Germany
(616)   Based on the Commission’s methodology, Adjusted market shares for the overall
        market for mascarpone in Germany are as follows.
                                                    Table 20
                                    Germany 2018, Mascarpone455
               Competitor                             Sales, tons        Market Share
               Lactalis - branded                          […]                [5-10]%
               Lactalis – private label                    […]               [10-20]%
               Nuova Castelli - branded                    […]                 [0-5]%
               Combined Parties PL + B                     […]               [20-30]%
               Goldsteig                                   […]                 [0-5]%
               Minus L                                     […]                 [0-5]%
               De Lucia                                    […]                 [0-5]%
               Exquisa                                     […]                 [0-5]%
               Others - branded                            […]                 [0-5]%
               Others – private label                      […]               [70-80]%
               Total sales                                8450                  100%
              Note: Internal branded sales for Nuova Castelli were inserted as there was no entry
              in the panel
455   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
                                                       96
 ---pagebreak--- (617)  Nuova Castelli had very limited sales of branded mascarpone in Germany in 2018.
       The Transaction will bring a limited increment to Lactalis’ market share in
       Germany.
(618)  Beside the considerations concerning the competitive landscape and shares of the
       market for mascarpone in Germany, the Commission considers that the Transaction
       does not raise serious doubts for the following reasons.
(619)  First, after the Transaction, the merged entity will continue to face significant
       competitive pressure from other brands as well as from private label competitors.
       These competitors are likely to continue exercising significant competitive pressure
       on the merged entity compared to the limited pressure exercised by Nuova Castelli
       on Lactalis pre-Transaction.
(620)  Second, with regard to the ability of customers to switch suppliers of mascarpone,
       none of German retailers that responded to the market investigation considered that
       it was not possible to switch to different supplier of mascarpone456 .
(621)  Moreover, in relation to the fact that Nuova Castelli distributes […] products, one
       German retailer mentioned […] as an alternative supplier for mascarpone457 . As
       further explained in paragraphs (368) to (369) […] could become an alternative in
       the short term, supplying its own products.
(622)  Third, the Commission notes that, according to the Notifying Party, to produce
       mascarpone, dairy companies can use the milk fat either to produce either cream or
       mascarpone. Manufacturing mascarpone is a way to add value to the left overs of
       the production of cheese. Dairy companies in Italy have a particular incentive to
       manufacture mascarpone: the market for cream is very small in Italy,
(623)  In view of this, the market investigation confirmed that investment to enter
       mascarpone production are relatively low. According to the notifying party
       investments for the production of 1,000 tons of mascarpone would amount to
       roughly EUR 1 million. By way of comparison, the entire Lactalis private label
       mascarpone sales in Germany are […].458
(624)  This finding was confirmed also by retailers responding to the market
       investigation. With regards to potential barriers to entry when asked if there are any
       significant barriers to the entry or expansion for mascarpone in terms of costs and
       time all of German retailers answered that there aren't. 459
(625)  Fourth, there has been a new entrant in the mascarpone market in Germany. As
       explained by a German retailer a new competitor Fude&Serran entered the market
       in 2015 as private label supplier. 460
(626)  Finally, the Commission found that the Transaction does not raise serious doubts as
       to its compatibility with the internal market on the plausible market for branded
       mascarpone in Germany.
456   Questionnaire to customers (Q2), question 92.
457   Questionnaire to customers (Q2), question 89.
458   As explained in Section 5.3.private label sales were reduced by […] for computing the Adjusted
      market shares.
459   Questionnaire to customers (Q2), question 96.
460   Questionnaire to customers (Q2), question 95.1.
                                                      97
 ---pagebreak--- (627)    In conclusion, in light of the above and based on the information available to the
         Commission and provided by Parties, the Commission considers that the
         Transaction does not raise serious doubts for the overall market for mascarpone in
         Germany.
5.7.4. Other markets
(628)    The Transaction results in additional affected markets in Germany, and in
         particular in the plausible markets for branded cow milk mozzarella and
         Gorgonzola, and for the overall (branded and private label) Gorgonzola.
(629)    However, in all these markets the Transaction results in a negligible increment due
         to the small presence of Nuova Castelli, bringing a limited or moderate increment
         to Lactalis’ shares, and the presence of other competitors in these markets.
(630)    On this basis the Commission finds that the Transaction does not raise serious
         doubts concerning these markets.
5.8.   Poland
(631)    Based on the market share data submitted by the Parties and in light of the
         methodology used (see Section 5.2), the Transaction gives rise to the following
         horizontally affected plausible markets in Poland: Cow milk mozzarella
         (Section 5.8.1; ricotta (Section 5.8.2), Gorgonzola (Section 5.8.3) and Italian-type
         hard cheeses (Section 5.8.4).
5.8.1. Cow milk mozzarella
(632)    Both Lactalis and Nuova Castelli supply branded and private label cow milk
         mozzarella to retailers in Poland. As outlined by the market shares, the main
         overlap between the Parties in cow milk mozzarella is in the supply of private label
         cow milk mozzarella to retailers in Poland.
       (A)        Branded cow milk mozzarella in Poland
(633)    For branded cow milk mozzarella, following the Commission’s methodology
         described in Section 5.2, the combined market share of the Parties in 2018 in
         Poland was [40-50]% (in volume), with a limited increment of Nuova Castelli’s
         market share of [0-5]% in view of Nuova Castelli’s limited brand presence.461
(634)    First, Nuova Castelli had limited sales of branded cow milk mozzarella in Poland
         in 2018 ([…]) and thus does not enjoy strong brand presence. The Transaction will
         bring a limited increment to Lactalis’ market share of [0-5]%.
(635)    Second, after the Transaction, the merged entity will continue to face significant
         competitive pressure from several suppliers of branded cow milk mozzarella,
         including Zottarella, Formagia, Bakoma, Jager and Osm Skierniewice. According
         to the data provided by the Parties and based on the Commission’s analysis (see
         Section 5.2), in 2018 each of these suppliers represented a stronger competitive
         constraint than Nuova Castelli with regard to branded cow milk mozzarella in
         Poland. Their individual sales of branded cow milk mozzarella were significantly
         higher than Nuova Castelli’s sales and accounted for [10-20]% of the overall
         market for cow milk mozzarella in Poland (see Table 21 below).
461    The combined value market shares for branded segment are lower than the volume shares provided by
       the Parties, but both still overstate the Parties’ position compared to panel data.
                                                            98
 ---pagebreak--- (636)   Third, the merged entity will also continue to face significant competitive
        constraints from several additional smaller suppliers of branded cow milk
        mozzarella that will remain in the Polish market post-Transaction. These suppliers
        accounted for [0-5]% of the overall market for cow milk mozzarella in Poland
        in 2018 (see Table 21 below).
(637)   In its assessment, the Commission has also considered the arguments presented in
        the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion, the availability of other
        suppliers, customers’ ability to multi-source and the impact of the Transaction that
        also apply to the assessment of branded cow milk mozzarella.
(638)   In conclusion, based on the information available to the Commission and provided
        by Parties, the Commission finds that the Transaction does not raise serious doubts
        as to its compatibility with the internal market with regard to the plausible market
        of branded cow milk mozzarella in Poland.
      (B)       Private label cow milk mozzarella in Poland
(639)   For private label cow milk mozzarella, based on the market shares provided by the
        Parties, the combined market share of the Parties in 2018 in Poland was [50-60]%
        (in volume), with a moderate increment of Nuova Castelli’s market share of [5-
        10]% in view of Nuova Castelli’s moderate brand presence.
(640)   First, Nuova Castelli had moderate sales of private label cow milk mozzarella in
        Poland in 2018 ([…]) bringing a moderate increment of [5-10]% to the combined
        market share.
(641)   Second, after the Transaction, the merged entity will continue to face significant
        competitive pressure from several suppliers of private label cow milk mozzarella.
        According to the data provided by the Parties and based on the Commission’s
        analysis (see Section 5.2), in 2018 these suppliers combined represented a stronger
        competitive constraint than Nuova Castelli with regard to private label cow milk
        mozzarella in Poland. Their combined sales of private label cow milk mozzarella
        were significantly higher than Nuova Castelli’s sales and accounted for [20-30]%
        of the overall market for cow milk mozzarella in Poland (see Table 21 below).
(642)   In its assessment, the Commission has also considered the arguments presented in
        the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion, the availability of other
        suppliers, customers’ ability to multi-source and the impact of the Transaction that
        also apply to the assessment of private label cow milk mozzarella.
(643)   In conclusion, based on the information available to the Commission and provided
        by Parties, the Commission finds that the Transaction does not raise serious doubts
        as to its compatibility with the internal market with regard to the plausible market
        of private label cow milk mozzarella in Poland.
      (C)       Overall features of the cow milk mozzarella market in Poland
(644)   Based on the Commission's methodology, Adjusted market shares for the overall
        market for cow milk mozzarella are as follows.
                                                 99
 ---pagebreak---                                                 Table 21
                               Poland 2018, Cow milk mozzarella462
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]               [10-20]%
              Lactalis – private label                     […]               [30-40]%
              Nuova Castelli -branded                      […]                 [0-5]%
              Nuova Castelli – private label               […]                [5-10]%
              Combined Parties PL + B                      […]               [50-60]%
              Zottarella                                   […]                [5-10]%
              Formagia                                     […]                 [0-5]%
              Bakoma                                       […]                 [0-5]%
              Jager                                        […]                 [0-5]%
              Osm Skierniewice                             […]                 [0-5]%
              Others - branded                             […]                 [0-5]%
              Others – private label                       […]               [20-30]%
              Total sales                                12389                  100%
              Note: Internal branded sales were inserted for Nuova Castelli as there
                         was no entry in the panel
(645)   The Transaction results in an affected market because of Lactalis’ sales of private
        label cow milk mozzarella. Nuova Castelli has a moderate presence in the overall
        market for cow milk mozzarella in Poland, bringing a moderate increment of
        [5-10]% to Lactalis’ market share.
(646)   Beside the considerations concerning the competitive landscape and shares of the
        market for cow milk mozzarella in Poland, the Commission considers that the
        Transaction does not raise serious doubts for the following reasons.
(647)   First, the Commission observes that the overall market of cow milk mozzarella in
        Poland appears to be fragmented (see Table 21 above) with competitors
        comparable to Nuova Castelli. Moreover, a Polish customer indicated that there
        were more than three viable suppliers of cow milk mozzarella in Poland.463
(648)   Second, after the Transaction, the merged entity will continue to face significant
        competitive pressure from several branded and private label suppliers that in 2018
        accounted for [40-50]% of the overall cow milk mozzarella market in Poland.
        These competitors are likely to continue exercising competitive pressure on the
        merged entity comparable to the pressure exercised by Nuova Castelli on Lactalis
        pre-Transaction.
462   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
463   Questionnaire to customers (Q2b), question 10.
                                                      100
 ---pagebreak--- (649)    Third, with regard to multi-sourcing, the majority of customers that responded to
         the market investigation indicated that they source cow milk mozzarella from two
         or more suppliers in 2018.464 A Polish customer indicated that it awards its required
         volumes of cow milk mozzarella to one supplier but it runs selection procedures for
         the procurement of cow milk mozzarella more than once a year.465
(650)    Fourth, as regards barriers to expansion, the market investigation suggested that at
         least one Polish supplier would be able to increase its existing production capacity
         and another one would be able to increase the amount of cow milk mozzarella that
         it trades in case there would be an increase in demand in Poland.466
(651)    Fifth, with regard to the impact of the Transaction and based on the market
         investigation, a Polish customer indicated that competition would decrease;467
         however, the majority of Polish competitors that provided a view indicated that the
         Transaction would not have a significant impact in any market for Italian-type
         cheeses or on their companies.468
(652)    Finally, the Commission found that the Transaction does not raise serious doubts as
         to its compatibility with the internal market on the plausible markets for branded
         cow milk mozzarella in Poland as well as private label cow milk mozzarella in
         Poland.
(653)    Based on the above considerations and in the light of the results of the market
         investigation, the Commission considers that the concentration does not raise
         serious doubts as to its compatibility with the internal market on the overall market
         for cow milk mozzarella in Poland.
5.8.2. Ricotta
(654)    Lactalis and Nuova Castelli are active in the market for ricotta in Poland. Both
         Parties sell branded ricotta and Nuova Castelli also sells private label ricotta.
       (A)        Branded ricotta in Poland
(655)    For branded ricotta, following the Commission’s methodology described in
         Section 5.2, the combined Adjusted market share of the Parties in 2018 in Poland
         was [30-40]% (in volume), with a limited increment of Nuova Castelli’s market
         share of [0-5]% in view of Nuova Castelli’s very limited brand presence.469
(656)    First, in this plausible market, the Transaction results in a negligible increment due
         to the very limited sales ([…]) and presence of Nuova Castelli.
(657)    Second, after the Transaction, the merged entity will continue to face significant
         competitive pressure from the strongest branded competitor to Lactalis, Ceko, as
         well as Talma and Biraghi. According to the data provided by the Parties and based
         on the Commission’s analysis (see Section 5.2 above), in 2018 each of these
         suppliers individually represented a stronger competitive constraint than Nuova
         Castelli with regard to branded ricotta in Poland. Ceko accounted for [20-30]%,
464    Questionnaire to customers (Q2), questions 66 and 70; Questionnaire to customers (Q2b), question 3.
465    Questionnaire to customers (Q2b), questions 4 and 5.
466    Questionnaire to competitors (Q1b), question 9.
467    Questionnaire to customers (Q2), question 18.
468    Questionnaire to competitors (Q1b), questions 26.1 and 26.2.
469    The combined value market shares for branded segment are higher (by less than 10 percentage
       points), but result in the smaller increment compared to the volume shares provided by the Parties,
       and both overstate the Parties’ position compared to panel data.
                                                       101
 ---pagebreak---         Talma for [10-20]% and Biraghi for [0-5]% of the overall ricotta market in Poland
        (see Table 22 below).
(658)   Third, the merged entity will also continue to face competitive constraints from
        other smaller suppliers of branded ricotta that will remain in the Polish market
        post-Transaction and that accounted for [0-5]% of the overall market for ricotta in
        Poland in 2018 (see Table 22 below).
(659)   In its assessment, the Commission has also considered the arguments presented in
        the below section as regards the overall market, and in particular concerning the
        absence of significant barriers to entry and expansion, the availability of other
        suppliers, the ability of customers to switch suppliers and the impact of the
        Transaction that also apply to the assessment of branded ricotta.
(660)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the plausible market of branded ricotta in Poland.
      (B)        Overall market for ricotta in Poland
(661)   Based on the Commission’s methodology, Adjusted market shares for the overall
        market for ricotta in Poland are as follows.
                                                    Table 22
                                        Poland 2018, Ricotta470
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]               [20-30]%
              Nuova Castelli - branded                     […]                [0-5]%
              Nuova Castelli – private label               […]               [20-30]%
              Combined Parties PL + B                      […]               [50-60]%
              Ceko                                         […]               [20-30]%
              Talma                                        […]               [10-20]%
              Biraghi                                      […]                [0-5]%
              Others - branded                             […]                [0-5]%
              Others – private label                       […]                [0-5]%
              Total sales                                  204                 100%
              Note: Parties private sales higher than the total of private label.
              Reduced proportionally
(662)   The Transaction results in an affected market because of Lactalis’ market share in
        branded products and Nuova Castelli’s market presence with private label products,
        bringing an increment to Lactalis’ market share of [20-30]% in the overall market
        for ricotta in Poland (see Table 22 above).
470   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
                                                      102
 ---pagebreak--- (663)  Beside the considerations concerning the competitive landscape and shares of the
       market for ricotta in Poland, the Commission considers that the Transaction does
       not raise serious doubts for the following reasons.
(664)  First, after the Transaction, the merged entity will continue to face significant
       competitive pressure from the strongest competitor to Lactalis, Ceko. According to
       the data provided by the Parties and based on the Commission’s analysis (see
       Section 5.2), in 2018 Ceko represented a stronger competitive constraint than
       Nuova Castelli with regard to the overall market for ricotta in Poland. Ceko’s sales
       of ricotta were significantly higher than Nuova Castelli’s sales and accounted for
       [20-30]% of the overall ricotta market in Poland.
(665)  Second, the merged entity will also continue to face significant competitive
       constraints from more than two additional competitors, which accounted for
       [10-20]% of the overall market for ricotta in Poland. These competitors, together
       with Ceko, are likely to continue exercising competitive pressure on the merged
       entity comparable to the pressure exercised by Nuova Castelli on Lactalis pre-
       Transaction.
(666)  Third, with regard to the ability of customers to switch suppliers of ricotta, the
       majority of customers that responded to the market investigation had not switched
       suppliers of branded or private label ricotta in the last three years;471 however, the
       majority of competitors and customers that responded to the market investigation
       indicated that it was possible to switch suppliers of ricotta.472
(667)  Fourth, concerning barriers to entry and expansion, the majority of competitors that
       responded to the market investigation indicated that there were significant barriers
       to expansion in terms of costs and time, including a Polish competitor.473 However,
       the majority of customers that responded to the market investigation indicated that
       there were not significant barriers to entry or expansion for ricotta in terms of costs
       and time in their countries. 474
(668)  Moreover, different from other fresh cheese products discussed above for which
       access to milk has been assessed as a potential barrier to entry, ricotta is produced
       from a by-product of other cheese production. In particular, as explained by the
       Notifying Party, ricotta is manufactured by heating whey to 80° C. The market
       investigation confirmed that ricotta is by-product of whey,475 which is a liquid
       derived from the production of soft and fresh cheese (e.g. mozzarella)476 . The
       Parties use their leftovers of whey to produce ricotta as well as milk powder.
       Nuova Castelli also sells part of its whey to third parties. In addition, the majority
       of customers that responded to the market investigation indicated that there were
       not significant barriers to entry or expansion for ricotta in terms of costs and
       time.477
471   Questionniare to customers (Q2), question 81.
472   Questionnaire to competitors (Q1), question 100; Questionniare to customers (Q2), question 83.
473   Questionnaire to competitors (Q1), question 102.
474   Questionniare to customers (Q2), question 87.
475   Questionnaire to competitors (Q1), question 15.
476   Questionnaire to competitors (Q1), question 15.1.
477   Questionnaire to customers (Q2), question 87.
                                                      103
 ---pagebreak--- (669)    Fifth, the majority of customers that responded to the market investigation
         indicated that the Transaction will not have impact on prices for the supply of
         ricotta in their countries.478 Moreover, a competitor indicated that it expected prices
         for ricotta to decrease in Poland.479
(670)    Finally, the Commission found that the Transaction does not raise serious doubts as
         to its compatibility with the internal market on the plausible market for branded
         ricotta in Poland.
(671)    In conclusion, in light of the above and based on the information available to the
         Commission and provided by Parties, the Commission considers that the
         Transaction does not raise serious doubts as to its compatibility with the internal
         market on the overall market for ricotta in Poland.
5.8.3. Gorgonzola
(672)    Lactalis supplies branded Gorgonzola to retailers in Poland, whereas Nuova
         Castelli supplies a very limited volume of branded Gorgonzola and moderate
         volumes of private label Gorgonzola to retailers. The Parties’ activities in relation
         to Gorgonzola in Poland give rise to an affected market if the overall market
         including branded and private label was considered, as well as if branded
         Gorgonzola is considered.
       (A)        Branded Gorgonzola in Poland
(673)    For branded Gorgonzola, following the Commission’s methodology described in
         Section 5.2, the combined market share of the Parties in 2018 in Poland was
         [50-60]% (in volume), with a limited increment of Nuova Castelli’s’ market share
         of [0-5]% in view of Nuova Castelli’s very limited brand presence.480
(674)    The Commission observes that Nuova Castelli's limited significance in the
         plausible market for branded Gorgonzola in Poland can be demonstrated by the de
         minimis sales of […] in the entire year 2018.
(675)    In light of the above, the Commission considers that the Transaction will not
         substantially modify the market structure and will not remove a significant
         competitive constraint for branded Gorgonzola in Poland.
(676)    In its assessment of this plausible market, the Commission also considered the
         arguments presented in the below section as regards the overall market, and in
         particular concerning other available suppliers, and the impact of the Transaction
(677)    In conclusion and based on the information available to the Commission and
         provided by Parties, the Commission finds that the Transaction does not raise
         serious doubts as to its compatibility with the internal market on the plausible
         market of branded Gorgonzola in Poland.
       (B)        Overall market for Gorgonzola in Poland
(678)    Based on the Commission’s methodology, Adjusted market shares for the overall
         market for Gorgonzola market in Poland are as follows.
478    Questionnaire to customers (Q2), question 124; Questionnaire to competitors (Q1), question 104.
479    Questionnaire to competitors (Q1), question 104.
480    The combined value market shares for branded segment are lower than the volume shares provided by
       the Parties, and both understate the Parties’ position compared to panel data.
                                                         104
 ---pagebreak---                                                      Table 23
                                     Poland 2018, Gorgonzola481
              Competitor                               Sales, tons         Market Share
              Lactalis - branded                           […]                [20-30]%
              Nuova Castelli -branded                      […]                 [0-5]%
              Nuova Castelli – private label               […]                [10-20]%
              Combined Parties PL + B                      […]                [30-40]%
              Igor                                         […]                [10-20]%
              Biraghi                                      […]                 [0-5]%
              Formagia                                     […]                 [0-5]%
              Others - branded                             […]                 [0-5]%
              Others – private label                       […]                [40-50]%
              Total sales                                  437                  100%
(679)   In the overall market for the supply of Gorgonzola to retailers in Poland, the Parties
        have a combined Adjusted market share of [30-40]% (in volume), with a moderate
        increment of [10-20]% due to Nuova Castelli’s moderate presence.
(680)   First, the Transaction results in an affected market because of Lactalis’ large
        market presence with branded products, with strong and widely recognised brands
        of Gorgonzola, and in particular Galbani. Nuova Castelli had moderate sales of
        Gorgonzola in Poland in 2018 ([…]) and thus does not enjoy strong brand
        presence. The Transaction will bring a moderate increment of [10-20]% to
        Lactalis’ market share.
(681)   Second, this is consistent with the fact that Nuova Castelli does not enjoy strong
        presence in Gorgonzola. As confirmed to the Commission by a third party,482 the
        market for Gorgonzola is strictly regulated by the Consorzio, there are several
        active players both in branded and private label and Nuova Castelli is a much
        smaller member player than Igor or Lactalis.483 A third party described Nuova
        Castelli as “rather small when it comes to Gorgonzola.”484
(682)   Third, after the Transaction, the merged entity will continue to face significant
        competitive pressure from the strongest competitor to Lactalis, Igor. According to
        the data provided by the Parties and based on the Commission’s analysis (see
        Section 5.2), in 2018 Igor represented a stronger competitive constraint than Nuova
        Castelli with regard to Gorgonzola in Poland. Igor’s sales of Gorgonzola were
        significantly higher than Nuova Castelli’s sales and accounted for [10-20]% of the
        overall Gorgonzola market in Poland.
481   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
482   Non-confidential version of minutes of a call with a third party, 24 July 2019.
483   Non-confidential version of minutes of a call with a third party DOP, 24 July 2019.
484   Courtesy translation from the Italian: “…ma una piccola impresa per quanto riguarda il gorgonzola”,
      Non-confidential version of minutes of a call with a third party, 24 July 2019.
                                                       105
 ---pagebreak--- (683)    Fourth, the merged entity will also continue to face significant competitive
         constraints from several other branded and private label suppliers which in 2018
         accounted for [40-50]% of the overall market for Gorgonzola in Poland. These
         competitors are likely to continue exercising competitive pressure on the merged
         entity comparable to the pressure exercised by Nuova Castelli on Lactalis pre-
         Transaction
(684)    Beside the considerations concerning the structure and shares of the Gorgonzola
         market in Poland, the Commission considers that the Transaction does not raise
         serious doubts for the following reasons.
(685)    First, from the point of view of customers, the market investigation suggested that
         the majority of retailers do not believe that there are barriers in terms of cost and
         time.485
(686)    Second, the majority of respondents indicated that it was easy or possible to switch
         to a different supplier of Gorgonzola.486
(687)    Third, the majority of the customers and two Polish competitors that responded to
         the market investigation indicated that the Transaction will have no impact on the
         prices of Gorgonzola in their countries.487
(688)    Finally, the Commission found that the Transaction does not raise serious doubts as
         to its compatibility with the internal market on the plausible market for branded
         Gorgonzola in Poland.
(689)    Based on the above considerations and in light of the results of the market
         investigation, the Commission considers that the concentration does not raise
         serious doubts as to its compatibility with the internal market on the overall market
         for Gorgonzola in Poland.
5.8.4. Italian-type hard cheese
(690)    Lactalis supplies only branded Italian-type hard cheeses, whereas Nuova Castelli
         supplies mainly private label and to some limited extent branded Italian-type hard
         cheeses to retailers in Poland. The Commission notes that the main overlap giving
         rise to an affected market is in the segment for branded Italian-type hard cheese. In
         light of this, the Commission will assess the likely effects of the Transaction on the
         branded segment and the overall market for the Italian-type hard cheese in Poland.
(691)    As a preliminary remark, the Commission notes that the Parties did not provide
         third-party panel data to substantiate their estimates for the total market size and
         their market shares. Therefore, for this part, the Commission will rely on the
         volume market shares data as submitted and substantiated by the Parties.488
       (A)         Branded Italian-type hard cheeses in Poland
(692)    If only the potentially relevant branded segment was considered, the Parties’
         combined market shares in terms of volume in 2018 would be [60-70]%
         (Lactalis: [50-60]%, Nuova Castelli: [5-10]%). First, the relatively small increment
         indicates that Nuova Castelli has only limited activities in the branded segment,
         which correspond to […] of actual sales through the full year of 2018.
485    Questionnaire to customers (Q2), question 105.
486    Questionnaire to customers (Q2), question 101; Questionnaire to competitors (Q1), question 122.
487    Questionnaire to customers (Q2), question 124; Questionnaire to competitors (Q1b), questions 26.1
       and 26.2.
488    Parties’ response to Commission’s request for information RFI 22.
                                                       106
 ---pagebreak--- (693)   Second, following the Transaction the Parties will continue facing effective
        competitive constraints from other branded products suppliers that in 2018
        accounted for [30-40]% of the relevant segment. In this regard, one customer
        submitted in the market investigation that in Poland Ambrosi enjoys a strong
        position (was referred to for Parmigiano Reggiano as the next strongest brand to
        Zarpellon, and for Grana Padano as the next strongest brand to Lactalis’ brand
        Galbani).489
(694)   Third, the Commission observes that the demand for branded Italian-type hard
        cheeses concerns about [50-60]% of the overall market. Given the important share
        of the private label segment in the overall market, the Commission considers that it
        is likely that private label, at least to some extent, exerts competitive pressure on
        the branded segment. In particular, since the competition for Italian-type hard
        cheeses, which include products covered by a Protected Denomination of Origin, is
        less affected by brand presence in view of the predominant role carried by such
        denominations (Parmigiano Reggiano, Grana Padano). Therefore, it makes the
        assessment of a market only consisting of branded product much less significant in
        this context. In this regard, the Parties submitted that brands carry little weight as
        the selling point is mostly the PDO branding. The presence of the PDO logos on a
        cheese wheel or bag of Parmigiano Reggiano ensures and indicates to the consumer
        that this cheese is produced, and the milk collected, exclusively in the PDO area,
        delivering recognition and quality perception expected from a brand. In line with
        this one competitor also explained: “The PDO brands enjoy high notoriety that it
        takes away “space” from private brands and indirectly attracts attention of private
        labels”.490
(695)   In its assessment of this plausible market, the Commission also considered the
        arguments presented in the below section as regards the overall market, and in
        particular availability of other suppliers, and the impact of the Transaction.
(696)   In conclusion and based on the information available to the Commission and
        provided by Parties, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        plausible market of branded Italian-type hard cheese in Poland.
      (B)        Overall market for Italian-type hard cheese in Poland
(697)   On the overall market for Italian-type hard cheeses in Poland, based on the market
        shares data submitted by the Parties, their combined market shares in volume terms
        in 2018 would be lower: [50-60]% (Lactalis: [30-40]%; Nuova Castelli: [20-30]%).
(698)   Although, post-Transaction the Parties will have large combined market shares, the
        Commission considers that the concentration does not raise serious doubts for the
        supply of Italian-type hard cheeses in Poland for the following reasons.
(699)   First, the Parties have submitted that following the Transaction, the merged entity
        will continue to face credible competitive constraints from the remaining
        competitors. The other companies active in this hypothetically relevant market are,
        for example, Ambrosi491 and Zanetti492 .
489   Questionnaire to customers (Q2), question 50.
490   Courtesy translation from Italian: “Il valore del brand DOP è talmente forte che toglie "spazio" ai
      Brand privati e, indirettamente, stimola l'attenzione delle private labels”; Questionnaire to
      competitors (Q1), question 128.1.
491   Form CO, paragraph 1196.
                                                      107
 ---pagebreak--- (700)    Third, in the private label segment, based on the Parties’ data, more than half of the
         demand is covered by other suppliers. The Parties have indicated that the following
         companies are active in Poland in private label segment: Euroser (Formagia),
         Zarpellon, and Brazzale.493
(701)    Fourth, Lactalis depends on the supply of Italian-type hard cheese from other
         manufacturers, such as […] or […], for its trading activity.494 While Nuova Castelli
         has limited overall shares of production in relation to PDO cheeses, it competes
         closer with those companies that are also active in production of PDO cheeses
         rather than only trading them.
(702)    Fifth, the Commission considers that it cannot be excluded that companies active in
         other national markets could potentially expand their activities in Poland. In this
         regard, the Parties submitted that competitors in Italian-type hard cheese could
         easily expand and gain market shares in national markets, in particular referring to
         companies such as Zanetti, Ambrosi, Colla, Parmareggio.495 The majority of all
         customers expressing their views in the market investigation suggested that there
         are no significant entry or expansion barriers in terms of cost and time.496 The
         Commission notes that in the market investigation a third-party has also indicated
         that in recent years there indeed have been several new entries into the national
         markets of companies who previously only had been active in Italy.497
(703)    Sixth, the majority of customers and competitors expressing their views in the
         market investigation indicated that the Transaction will not have impact on prices
         for the supply of Italian-type hard cheeses in their countries.498
(704)    Finally, the Commission found that the Transaction does not raise serious doubts as
         to its compatibility with the internal market on the plausible market for branded
         Italian-type hard cheeses in Poland.
(705)    In light of the above and based on the information available to the Commission and
         provided by Parties, the Commission considers that the Transaction does not raise
         serious doubts on the overall market for Italian-type hard cheeses in Poland.
5.8.5. Milk procurement
(706)    Lactalis and Nuova Castelli only procure conventional cow milk in Poland, and do
         not procure buffalo nor sheep milk there. In particular, the Parties procure both raw
         and pasteurised cow milk in the country.
(707)    For conventional cow milk, the market share of the Parties in 2018 for procurement
         of combined raw and pasteurised cow milk in Poland was below [0-5]%, with an
         increment of approximately [0-5]%.499
492    Questionnaire to competitors (Q1), question 133.
493    Parties’ response to Commission’s request for information RFI 22.
494    Form CO, paragraph 360.
495    Form CO, paragraph 1060.
496    Questionnaire to customers (Q2), question 113
497    Questionnaire to competitors (Q1), question135.1.
498    Questionnaire to customers (Q2), question 124; Questionnaire to competitors (Q1), questions 140
       and 141. Only one customer in Poland was concerned about the overall negative impact of the
       Transaction, however no substantiated concerns were formulated in relation to Italian-type hard
       cheeses (Questionnaire to customers (2b), question 18).
499    Form CO, paragraph 436.
                                                       108
 ---pagebreak--- (708)    For conventional raw cow milk, the market share of the Parties in 2018 for
         procurement of conventional raw cow milk in Poland was below [0-5]%, with an
         increment of [0-5]%.500
(709)    For conventional pasteurised cow milk, the market share of the Parties in 2018 for
         procurement of conventional pasteurised cow milk in Poland was [20-30]%, with a
         small increment of [5-10]%.501
(710)    In light of the above, the Commission’s analysis will focus on the market for
         conventional pasteurised cow milk in Poland.
(711)    First, the overall market for pasteurised cow milk in Poland is much smaller than
         that of raw milk (approximately 82 times).
(712)    Second, the Notifying Party used imports of bulk pasteurized milk in Poland (as
         indicated by CLAL)502 as a proxy. Therefore, the Notifying Party submits that this
         underestimates the total size of the market, given that it is frequent that dairy
         companies buy pasteurized milk that is not imported (but merely traded within one
         and the same Member State). Accordingly, the market shares presented are
         conservative.503
(713)    Third, in Poland, Lactalis operates a plant in […], whereas Nuova Castelli runs a
         production plant in […], which is located in a different part of the country. Nuova
         Castelli also imports milk from Germany for its Polish plant of […].504
(714)    Fourth, Nuova Castelli procures very limited volumes of milk in Poland, i.e., […]
         in 2018, which represents a [0-5]% market share.505
(715)    Based on the above considerations and in light of the results of the market
         investigation, the Commission considers that the concentration does not raise
         serious doubts as to its compatibility with the internal market as regards the
         plausible market for the procurement of conventional cow milk in Poland.
5.8.6. Other markets
(716)    The Transaction results in additional affected markets in Poland, and in particular
         in the plausible markets for branded and overall (private label and branded) buffalo
         milk mozzarella.
(717)    However, in this market the Transaction results in a negligible increment due to the
         small presence of Nuova Castelli based on its limited volume of sales or shares,
         and/or the presence of other competitors in this market.
(718)    On this basis the Commission finds that the Transaction does not raise serious
         doubts concerning these markets.
5.9.   Sweden
(719)    Based on the market share data submitted by the Parties and in light of the
         methodology used (see Section 5.2), the Transaction gives rise to the following
         horizontally affected plausible markets in Sweden: Cow milk mozzarella
         (Section 5.9.1) and Italian-type hard cheese (Section 5.9.2).
500    Form CO, paragraph 436.
501    Form CO, paragraph 436.
502    https://www.clal.it/en/index.php?section=quadro_europa&country=PL.
503    Form CO, paragraph 437.
504    Form CO, paragraph 174.
505    Form CO, paragraph 174.
                                                      109
 ---pagebreak--- 5.9.1. Cow milk mozzarella
(720)    Lactalis supplies mainly branded cow milk mozzarella, whereas Nuova Castelli has
         limited sales of both branded and private label cow milk mozzarella in Sweden.
         While the data available to the Commission indicates that Lactalis had very limited
         recorded sales of private label cow milk mozzarella in Sweden ([…] in 2018), the
         Commission notes that the overlap giving rise to a plausible affected market is in
         the segment for branded cow milk mozzarella. In light of this, the Commission will
         assess the likely effects of the Transaction on the branded segment and the overall
         market for cow milk mozzarella in Sweden.
       (A)        Branded cow milk mozzarella in Sweden
(721)    If only the potentially relevant branded segment was considered, the Parties
         combined Adjusted market shares would be: [30-40]% (Lactalis: [30-40]%, Nuova
         Castelli: [5-10]%).506 The Commission notes that the low increment of [5-10]% to
         the market shares represents recorded sales of Nuova Castelli of less than […] in
         the entire year 2018 and indicates low significance of Nuova Castelli as a
         competitive constraint in the plausible branded product market for cow milk
         mozzarella.
(722)    Second, following the Transaction the Parties will continue to face effective
         competitive constraints from several credible competitors. Based on the third-party
         data (see Table 24), the Commission considers that the supply of branded cow milk
         mozzarella in Sweden is rather fragmented with several strong competitors present
         in this plausible market. The Commission observes that the leading supplier of
         branded cow milk mozzarella is Michelangelo, followed by Lactalis and Zeta.
         There is also a further company Wernersson that competes in this segment and
         supplies slightly larger volumes than recorded volumes of Nuova Castelli, which
         are the smallest from all branded products suppliers.
(723)    Third, the small presence of Nuova Castelli on the branded segment can be
         explained by low notoriety of its brands Di Vittorio and Castelli.507 None of the
         customers from Sweden responding in the market investigation listed Nuova
         Castelli’s brands among the strongest brands for cow milk mozzarella.508
(724)    Fourth, the Commission observes that although both Lactalis and Nuova Castelli
         are active in the branded segment, they are not the closest competitors because of
         different strength of their brands. According to the customers from Sweden
         expressing views, the strongest brands for cow milk mozzarella are Michelangelo
         and Lactalis’ brand Galbani.509 The Commission notes that this is directly reflected
         in their market shares.
(725)    Fifth, the customers from Sweden responding to the market investigation also
         indicated that it is possible to switch to a different supplier for branded cow milk
         mozzarella.510 However, as one customer explained that switching is possible “if
         the brands are equally strong”.511 The Commission considers that given different
506    The combined value market shares for branded segment are slightly higher (by less than 5 percentage
       points) than the volume shares provided by the Parties, and both overestimate the Parties’ position
       compared to panel data.
507    Form CO, paragraph 347.
508    Questionnaire to customers (Q2), question 50.
509    Questionnaire to customers (Q2), question 50.
510    Questionnaire to customers (Q2), question 69.
511    Questionnaire to customers (Q2), question 69.1.
                                                       110
 ---pagebreak---         level of strength of the Parties’ brands, the Transaction will likely not remove an
        effective competitive constraint in this segment.
(726)   In its assessment of this plausible market, the Commission also considered the
        arguments presented in the below section as regards the overall market, and in
        particular concerning the market structure, availability of alternative suppliers, and
        the impact of the Transaction.
(727)   In conclusion and based on the information available to the Commission and
        provided by Parties, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        plausible market of branded cow milk mozzarella in Sweden.
      (B)        Overall market for cow milk mozzarella in Sweden
(728)   On the overall market for cow milk mozzarella in Sweden, based on the market
        share data submitted by the Parties and in light of the methodology described in
        Section 5.2, the combined Adjusted market shares of the Parties in volume terms
        in 2018 were [20-30]% (Lactalis: [10-20]%, Nuova Castelli: [5-10]%).
                                                Table 24
                           Sweden 2018, Cow milk mozzarella512
          Competitor                               Sales, tons       Market Share
          Lactalis - branded                          […]                [10-20]%
          Lactalis – private label                    […]                  [0-5]%
          Nuova Castelli - branded                    […]                  [0-5]%
          Nuova Castelli – private label              […]                 [5-10]%
          Combined Parties PL + B                     […]                [20-30]%
          Others – private label                      […]                [40-50]%
          Michelangelo                                […]                [10-20]%
          Zeta                                        […]                [10-20]%
          Wernersson                                  […]                  [0-5]%
          Total sales                                 4014                  100%
          Note: Internal branded sales were inserted for Nuova Castelli as there
          was no entry in the panel. The sales were reduced to match the
          unspecified difference in the panel
(729)   Although, post-Transaction the Parties will have moderate combined market
        shares, the Commission considers that the Transaction does not raise serious doubts
        for the supply of cow milk mozzarella under any plausible market definition for the
        following reasons.
(730)   Further to the considerations provided in relation to the branded segment of the
        overall market, the Commission observes that the demand for branded cow milk
        mozzarella concerns [50-60]% of the overall market (see Table 24). The
512   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
                                                      111
 ---pagebreak---          Commission notes that the share of the private label segment has been growing in
         the last three years (from [40-50]% in 2016 to [50-60]% in 2018).513
(731)    Given the growing importance of the private label segment in the overall market,
         the Commission considers that it is likely that private label, at least to some extent,
         exerts competitive pressure on the branded segment. The Commission notes that
         Nuova Castelli has only a small presence in the private label segment ([5-10]% of
         the overall market514 ) as recorded in Table 24), in which other suppliers cover most
         of the demand. Based on the Parties’ submitted data, the main players in the private
         label segment in Sweden are Bayernland: [[10-20] of the overall market]%;
         Zott: [5-10]%; Latteria Tinis: [5-10]%; Granarolo [10-20]%; and Villa: [0-5]%.515
(732)    In line with the above, the Commission considers that the market for cow milk
         mozzarella is fragmented with several credible players both in the branded and
         private label segments. As one customer in Sweden explained referring to entry
         barriers for cow milk mozzarella: “It is a tough market with strong brands as Zeta
         and Galbani and a lot of price fighting brands”.516
(733)    The results of the market investigation also support the finding that customers in
         Sweden have credible suppliers other than the Parties and that it is possible to
         switch suppliers.517 Accordingly, the Commission considers that following the
         Transaction, the merged entity will continue to face competitive constraints from
         credible competitors.
(734)    Overall, none of the customers from Sweden taking part in the market investigation
         expressed concerns related to the Transaction.518
(735)    Finally, the Commission found that the Transaction does not raise serious doubts as
         to its compatibility with the internal market on the plausible market for branded
         cow milk mozzarella in Sweden.
(736)    Based on the above considerations and in the light of the results of the market
         investigation, the Commission considers that the Transaction does not raise serious
         doubts as to its compatibility with the internal market on the overall market for cow
         milk mozzarella in Sweden.
5.9.2. Italian-type hard cheese
(737)    Lactalis supplies only branded Italian-type hard cheeses, whereas Nuova Castelli
         supplies mainly private label and to some limited extent branded Italian-type hard
         cheeses to retailers in Sweden. In light of this, the Commission will assess the
         likely effects of the Transaction on the branded segment and the overall market for
         the Italian-type hard cheeses in Sweden.
513    Parties’ response to the Commission’s request for information RFI 23.
514    Based on the market shares submitted by the Parties, the Nuova Castelli’s share in the plausible
       private label segment would be [5-10]%, while Lactalis would bring an increment of less than [0-5]%,
       thereby not giving rise to an affected plausible market and indicating very limited presence of the
       Parties.
515    Parties’ response to Commission’s request for information RFI 22.
516    Questionnaire to customers (2), question 78.1.
517    Questionnaire to customers (2), questions 70, 73.
518    Questionnaire to customers (2), question 123.
                                                        112
 ---pagebreak---       (A)        Branded Italian-type hard cheeses in Sweden
(738)   First, if only the segment of branded Italian-type hard cheeses was considered,
        based on the Adjusted market share data, the Parties’ combined Adjusted market
        shares in volume terms in 2018 would be: [20-30]% (Lactalis: [20-30]%; Nuova
        Castelli: [0-5]%).519 The low increment of [0-5]% to the market shares represents
        minimal recorded sales of Nuova Castelli of […] in the entire year 2018 and also
        indicates low significance of Nuova Castelli as a competitive constraint in the
        plausible branded product market.
(739)   Second, following the Transaction the Parties will continue to face competitive
        constraints from several credible competitors. In the branded segment in Sweden,
        Zeta is the leading supplier with […], which is double than the Parties’ combined
        recorded sales of branded products. The Commission notes that further [5-10]% of
        the overall demand is covered by sales under other brands, which would
        correspond to almost four times larger sales than the recorded volume of Nuova
        Castelli.
(740)   Third, one customer from Sweden also explained that Sweden is a small market
        and Zeta and Galbani enjoy brand notoriety in Sweden.520 None of the customers
        responding listed Nuova Castelli as their supplier. Accordingly, the Commission
        considers that this further supports the finding that Nuova Castelli is not exerting
        an effective competitive constraint for the supply of branded Italian-type hard
        cheese in Sweden.
(741)   Fourth, competition for Italian-type hard cheeses, which encompass products
        covered by a Protected Denomination of Origin, is less affected by brand presence
        in view of the predominant role carried by such denominations (Parmigiano
        Reggiano, Grana Padano). Therefore, it makes the assessment of a market only
        consisting of branded product much less significant in this context. In particular,
        the Parties submitted that brands carry little weight as the selling point is mostly
        the PDO branding. The presence of the PDO logos on a cheese wheel or bag of
        Parmigiano Reggiano ensures and indicates to the consumer that this cheese is
        produced, and the milk collected, exclusively in the PDO area, delivering
        recognition and quality perception expected from a brand. In line with this one
        competitor also explained: “The PDO brands enjoy high notoriety that it takes
        away “space” from private brands and indirectly attracts attention of private
        labels”.521
(742)   In light of the above and in particular given the very limited activities of Nuova
        Castelli, the Commission considers that the Transaction will not substantially
        modify the market structure and will not remove a significant competitive
        constraint for branded Italian-type-hard cheese in Sweden.
(743)   In its assessment of this plausible market, the Commission also considered the
        arguments presented in the below section as regards the overall market, and in
        particular concerning the market structure, availability of alternative suppliers,
        limited competitive position of Lactalis and the impact of the Transaction.
519   The combined value market shares for branded segment are lower than the volume shares provided by
      the Parties, and are in line with the Parties’ position compared to panel data.
520   Questionnaire to customers (2), Question 113.1.
521   Courtesy translation from the Italian: “Il valore del brand DOP è talmente forte che toglie "spazio" ai
      Brand privati e, indirettamente, stimola l'attenzione delle private labels”; Questionnare to
      competitors (Q1), question 128.1.
                                                          113
 ---pagebreak--- (744)   In conclusion and based on the information available to the Commission and
        provided by Parties, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        plausible market of branded Italian-type hard cheeses in Sweden.
      (B)        Overall market for Italian-type hard cheese in Sweden
(745)   On the overall market for Italian-type hard cheeses in Sweden, based on the market
        share data submitted by the Parties and in light of the methodology described in
        Section 5.2, the combined Adjusted market shares of the Parties in volume terms
        in 2018 were: [20-30]% (Lactalis: [5-10]%; Nuova Castelli: [10-20]%).
                                                Table 25
                             Sweden 2018, Italian-type hard cheese522
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]                [5-10]%
              Nuova Castelli – branded                     […]                 [0-5]%
              Nuova Castelli – private label               […]               [10-20]%
              Combined Parties PL + B                      […]               [20-30]%
              Others - branded                             […]                [5-10]%
              Others – private label                       […]               [40-50]%
              Zeta                                         […]               [20-30]%
              Total sales                                 1689                  100%
              Note: Internal branded sales were inserted for Nuova Castelli as there
              was no entry in the panel
(746)   Although, following the Transaction the Parties will have moderate combined
        market shares, the Commission considers that the concentration does not raise
        serious doubts for the supply of Italian-type hard cheeses in Sweden for the reasons
        already discussed above and the following reasons.
(747)   First, as observed in other countries, the market structure for the supply of Italian-
        type hard cheeses in Sweden suggests that strong competitive constraints come
        from private label segment, which has approximately [60-70]% share in the overall
        market in 2018 compared to [40-50]% in 2016.523 The Parties activities do not
        overlap in this segment. Based on the data in Table 25, other private label suppliers
        than Nuova Castelli account for a significant part ([40-50]%) of the overall demand
        for Italian-type hard cheese in Sweden. The Parties have indicated that following
        companies are active in private label supply in Sweden: Soresina, Ferrari, Zanetti,
        Wernersson, and Colla.524
(748)   Second, following the Transaction the Parties will continue to face effective
        competitive constraints from several credible competitors in branded, as well as in
        private segments. Further to competitors listed in paragraphs (739) - (740),
522   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
523   Parties’ response to the Commission’s request for information RFI 23.
524   Parties’ response to the Commission’s request for information RFI 22.
                                                      114
 ---pagebreak---         and (747), in the market investigation, a customer from Sweden indicated further
        companies Di Luca and Gennaro Auricchio as its top suppliers for private and
        branded label Italian-type hard cheeses.525
(749)   Third, Lactalis depends on the supply of Italian-type hard cheeses from other
        manufacturers, such as […] or […], for its trading activity.526 While Nuova Castelli
        has limited overall shares of production in relation to PDO cheeses, it competes
        closer with those companies that are also active in production of PDO cheeses
        rather than only trading them.
(750)   Fourth, the Commission considers that it cannot be excluded that companies active
        in other national markets could potentially expand their activities in Sweden. In this
        regard, the Parties submitted that competitors in Italian-type hard cheese could
        easily expand and gain market shares in national markets, in particular referring to
        companies such as Zanetti, Ambrosi, Colla, Parmareggio.527 The majority of all
        customers expressing their views in the market investigation suggested that there
        are no significant entry or expansion barriers in terms of cost and time.528 The
        Commission notes that in the market investigation the Consortia for Parmigiano
        Reggiano has also indicated that in recent years there indeed have been several new
        entries into the national markets of companies who previously only had been active
        in Italy.529
(751)   Fifth, none of the customers from Sweden expressed concerns related to the
        Transaction.530 As one customer explained: “On the Swedish market, Castelli is a
        very small brand, and will not have any impact on the market situation”.531
(752)   Finally, the Commission found that the Transaction does not raise serious doubts as
        to its compatibility with the internal market on the plausible market for branded
        Italian-type hard cheese in Sweden.
(753)   Based on the above considerations and in the light of the results of the market
        investigation and the information submitted by the Parties, the Commission
        considers that the Transaction does not raise serious doubts as to its compatibility
        with the internal market on the overall market for Italian-type hard cheese in
        Sweden.
5.9.3. Other markets
(754)   The Transaction results in additional affected markets in Sweden, and in particular
        in the plausible markets for branded ricotta, mascarpone and Gorgonzola, and the
        overall (private label and branded) Gorgonzola.
(755)   However, in this market the Transaction results in a negligible increment due to the
        small presence of Nuova Castelli based on its limited volume of sales or shares,
        and the presence of other competitors in this market.
(756)   On this basis the Commission finds that the Transaction does not raise serious
        doubts concerning these markets.
525    Questionnaire to customers (2), question 107.
526    Form CO, paragraph 360.
527    Form CO, paragraph 1060.
528    Questionnaire to customers (Q2), question 113
529    Questionnaire to competitors (Q1), question 135.1.
530    Questionnaire to customers (2), question 123.
531    Questionnaire to customers (2), question 123.1.
                                                       115
 ---pagebreak--- 5.10. Denmark
(757)     Based on the market share data submitted by the Parties and in light of the
          methodology used (see Section 5.2), the Transaction gives rise to the following
          horizontally affected plausible markets in Denmark: Cow milk mozzarella
          (Section 5.10.1); mascarpone (Section 5.10.2) and Italian-type hard cheeses
          (Section 5.10.3).
5.10.1. Cow milk mozzarella
(758)     Both Lactalis and Nuova Castelli supply branded and private label cow milk
          mozzarella to retailers in Denmark.
        (A)        Branded cow milk mozzarella in Denmark
(759)     For branded cow milk mozzarella the combined Adjusted market share of the
          Parties in 2018 in Denmark was [30-40]% (in volume), with Lactalis’ adding an
          increment of [5-10]% to Nuova Castelli [20-30]% market share.532
(760)     First, Lactalis has moderate sales of branded cow milk mozzarella in Denmark
          in 2018 and thus does not enjoy strong brand presence contrary to other markets.
(761)     Second, after the Transaction, the merged entity will continue to face significant
          competitive pressure from the alternative branded suppliers. According to the data
          provided by the Parties and based on the Commission’s analysis (see Section 5.2),
          in 2018 the competitors for branded mozzarella represented [70-80]% of the
          market.
(762)     Third, market investigation shows that retailers in Denmark have the ability to
          switch branded mozzarella suppliers. As explained by a retailer: ‘Due to difference
          of opinion regarding buying prices made us delist Galbani and list Trentin. This
          has been reversed in 2019’.533
(763)     Therefore, given the market shares, and given that the increment brought about by
          the transaction is moderate, the plausible branded market will continue having a
          multitude of credible suppliers with established commercial relations with retailers.
(764)     The Commission has also considered in its assessment that the arguments presented
          in the below section as regards the overall market, and in particular concerning the
          availability of other suppliers, lack of barriers to switching and the impact of the
          Transaction with respect to this plausible market also apply to the assessment of
          branded cow milk mozzarella.
(765)     In view of the above, the Commission finds that the Transaction does not raise
          serious doubts as to its compatibility with the internal market with regard to the
          branded cow milk mozzarella.
        (B)        Private label cow milk mozzarella in Denmark
(766)     In the private label segment there seem to be a number of viable competitors that
          offer volumes of cow milk mozzarella to retailers in Denmark. Based on the
          Notifying Party’s estimates, there is a significant number of alternative private
532     The combined value market shares for branded segment are slightly higher (by less than 5 percentage
        points) than the volume shares provided by the Parties, but both underestimate the Parties’ position
        compared to panel data.
533     Questionnaire to customers (Q2), question 68.1
                                                       116
 ---pagebreak---         label supplier in Denmark: Bayerische Milchindustrie eG: [5-10]%; Spezialitäten-
        Käserei Wiegert GmbH: [5-10]%; Caseificio Villa srl: [5-10]%; Goldsteig
        Käsereien Bayerwald GmbH: [0-5]%;
(767)   The Commission has also considered in its assessment that the arguments presented
        in the below section as regards the overall market, and in particular concerning the
        availability of other suppliers, lack of barriers to switching and the impact of the
        Transaction with respect to this plausible market also apply to the assessment of
        private label cow milk mozzarella.
(768)   In view of the above, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        private label cow milk mozzarella.
      (C)        Overall marketfor cow milk mozzarella in Denmark
(769)   On the overall market for the supply of branded and private label cow milk
        mozzarella to retailers in Denmark, and in light of the methodology described in
        Section 5.2, the Parties had a combined market share in 2018 of [40-50]%, with an
        increment of [10-20]%.
                                                    Table 26
                              Denmark 2018, Cow milk mozzarella534
              Competitor                              Sales, tons        Market Share
              Lactalis -branded                            […]                [5-10]%
              Lactalis – private label                     […]                [5-10]%
              Nuova Castelli - branded                     […]               [20-30]%
              Nuova Castelli – private label               […]                [5-10]%
              Combined Parties PL + B                      […]               [40-50]%
              Others - branded                             […]               [50-60]%
              Others – private label                       […]                 [0-5]%
              Trentin                                      […]                 [0-5]%
              Total sales                                 2508                  100%
              Note: Parties private sales higher than the total of private label.
              Reduced proportionally
(770)   Beside the considerations concerning the competitive landscape and shares of the
        market for cow milk mozzarella in Denmark, the Commission considers that the
        Transaction does not raise serious doubts for the following reasons.
(771)   First, the Commission observes that the overall market of cow milk mozzarella in
        Denmark appears to be fragmented with several credible competitors. A Danish
        retailer indicated that it had three viable suppliers of cow milk mozzarella.535 The
534   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
535   Questionnaire to customers (Q2), question 66.
                                                      117
 ---pagebreak---           results of the market investigation indicate that there are further additional
          suppliers of branded and private label cow milk mozzarella in Denmark.536
(772)     Second, after the Transaction, the merged entity will continue to face significant
          competitive pressure from several branded and private label suppliers that in 2018
          accounted for [50-60]% of the overall cow milk mozzarella market in Denmark.
          These competitors are likely to continue exercising competitive pressure on the
          merged entity comparable to the pressure exercised by Nuova Castelli on Lactalis
          pre-Transaction. As an illustration of this competitive interaction, a Danish
          customer indicated that for a given tender of private label mozzarella issued
          recently there were four participants.537
(773)     Third, the two Danish retailers that expressed a view in the market investigation
          indicated that it was easy to switch to a different supplier of cow milk
          mozzarella.538
(774)     Fourth, with regard to the impact of the Transaction and based on the market
          investigation, out of the Danish customers that provided a view, one indicated that
          this will lead to less supplier options. However, the other two indicated that the
          Transaction would not have a significant impact in any market for Italian-type
          cheeses.539
(775)     Finally, the Commission found that the Transaction does not raise serious doubts as
          to its compatibility with the internal market on the plausible markets for branded
          cow milk mozzarella in Denmark as well as private label cow mozzarella in
          Denmark.
(776)     Based on the above considerations and in the light of the results of the market
          investigation, the Commission considers that the Transaction does not raise serious
          doubts as to its compatibility with the internal market on the overall market for cow
          milk mozzarella in Denmark.
5.10.2. Mascarpone
(777)     Both Parties supply branded mascarpone in the Denmark, but only Lactalis
          supplies private label. Based on the information provided by the Notifying Party,
          Nuova Castelli does not produce, but only trades, mascarpone. It purchases […] of
          its requirements from […].
        (A)        Branded mascarpone in Denmark
(778)     Both Lactalis and Nuova Castelli supply branded mascarpone to retailers in
          Denmark.
(779)     For branded mascarpone the combined Adjusted market share of the Parties
          in 2018 in Denmark was [40-50]% (in volume), with Lactalis adding an increment
          of [10-20]% to Nuova Castelli [20-30]% market share.540
(780)     First, Lactalis had moderate sales of branded mascarpone in Denmark in 2018 and
          thus does not enjoy strong brand presence contrary to other markets.
536     Questionnaire to customers (Q2b), questions 9.
537     Questionnaire to customers (Q2b), questions 9.
538     Questionnaire to customers (Q2), questions 69.
539     Questionnaire to customers (Q2), questions 123; Questionnaire to customers (Q2b), question 18.1.
540     The combined value market shares for branded segment are higher (by less than 7 percentage points)
        than the volume shares provided by the Parties, and both overestimate the Parties’ position compared
        to panel data.
                                                       118
 ---pagebreak--- (781)   Second, after the Transaction, the merged entity will continue to face significant
        competitive pressure from the alternative branded suppliers. According to the data
        provided by the Parties and based on the Commission’s analysis (see Section 5.2),
        in 2018 the competitors for branded mascarpone represented [50-60]% of the
        market.
(782)   Third, the merged entity will continue to face significant competitive constraints
        from Trentin which roughly is as big as Nuova Castelli, as well as from other
        branded suppliers which together represent more than [20-30]% of the overall
        market for mascarpone in Denmark.
(783)   The Commission has also considered in its assessment that the arguments presented
        in the below section as regards the overall market, and in particular concerning the
        availability of other suppliers, the absence of significant barriers to entry and
        expansion, lack of barriers to switching with respect to this plausible market also
        apply to the assessment of branded mascarpone.
(784)   In view of the above, the Commission finds that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with regard to the
        branded mascarpone.
      (B)        Overall market for mascarpone in Denmark
(785)   Based on the Commission’s methodology, Adjusted market shares for the overall
        market for mascarpone in Denmark are as follows.
                                                    Table 27
                                    Denmark 2018, Mascarpone541
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]               [10-20]%
              Lactalis – private label                     […]               [20-30]%
              Nuova Castelli - branded                     […]               [20-30]%
              Combined Parties PL + B                      […]               [50-60]%
              Others - branded                             […]               [20-30]%
              Others – private label                       […]                [0-5]%
              Trentin                                      […]               [20-30]%
              Total sales                                  173                 100%
              Note: Parties private sales were higher than the total of private label.
              They were reduced proportionally.
(786)   Beside the considerations concerning the competitive landscape and shares of the
        market for mascarpone in Denmark, the Commission considers that the Transaction
        does not raise serious doubts for the following reasons.
(787)   First, after the Transaction, the merged entity will continue to face significant
        competitive pressure from other brands as well as from private label competitors.
541   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
                                                      119
 ---pagebreak--- (788)     According to sales data provided by the Parties, Lactalis in light of the
          methodology described in Section 5.2 appears to have higher sales in private label
          than the private label market size as reported by third parties providers. However
          based on the Notifying Party’s estimates, there is a significant number of
          alternative private label supplier in Denmark: Trentin: [20-30]%; Centrale del Latte
          di Brescia: [10-20]%. These competitors are likely to continue exercising
          significant competitive pressure on the merged entity.
(789)     Second, with regard to the ability of customers to switch suppliers of mascarpone,
          Danish retailers that responded to the market investigation considered that it was
          easy to switch to different supplier of mascarpone542 . Market investigation shows
          that retailers in Denmark have the ability to switch branded mascarpone suppliers.
          As explained by a retailer: ‘We switched from Lactalis to Trentin and back again
          due to difference of opinion regarding buying prices’.543
(790)     Therefore, the branded side of the market will continue having a multitude of
          credible suppliers with established commercial relations with retailers.
(791)     Third, the Commission notes that, according to the Notifying Party, to produce
          mascarpone, dairy companies can use the milk fat either to produce cream or
          mascarpone. Manufacturing mascarpone is a way to add value to the left overs of
          the production of cheese. Dairy companies in Italy have a particular incentive to
          manufacture mascarpone: the market for cream is very small in Italy.
(792)     In view of this, the market investigation confirmed that investment to enter
          mascarpone production are relatively low. According to the Notifying Party
          investments for the production of 1,000 tons of mascarpone would amount to
          roughly EUR 1 million. By way of comparison, the entire Danish market is
          reported by third party data to be 173 tons.
(793)     This finding was confirmed also by retailers responding to the market
          investigation. With regards to potential barriers to entry when asked if there are any
          significant barriers to the entry or expansion for mascarpone in terms of costs and
          time none of the Danish retailers replied that there were barriers to entry.544
(794)     Finally, the Commission found that the Transaction does not raise serious doubts as
          to its compatibility with the internal market on the plausible market for branded
          mascarpone in Denmark.
(795)     Based on the above considerations and in the light of the results of the market
          investigation, the Commission considers that the Transaction does not raise serious
          doubts as to its compatibility with the internal market on the overall market for
          mascarpone in Denmark.
5.10.3. Italian-type hard cheese
(796)     Lactalis supplies only branded Italian-type hard cheese in Denmark, whereas
          Nuova Castelli supplies mainly branded and to some limited extent private label
          Italian-type hard cheeses to retailers in Denmark. Given that the main overlap is in
          the supply of branded Italian-type hard cheese, the Commission will assess the
          effects of the Transaction in relation to the branded segment and the overall
          market.
542     Questionnaire to customers (Q2), question 92.
543     Questionnaire to customers (Q2), question 90.1.
544     Questionnaire to customers (Q2), question 96.
                                                        120
 ---pagebreak---       (A)        Branded Italian-type hard cheese in Denmark
(797)   First, if only the segment of branded Italian-type hard cheese was considered,
        based on the Commission’s Adjusted market shares methodology, the Parties’
        combined market shares in volume terms in 2018 would be just above the
        threshold: [20-30]% (Lactalis: [0-5]%; Nuova Castelli: [10-20]%).545 The low
        increment of [0-5]% to the market shares represents minimal recorded sales of
        Lactalis of […] in the entire year 2018 and also indicates low significance of
        Lactalis as a competitive constraint in the plausible branded product market.
(798)   Second, several credible competitors remain for the supply of branded Italian-type
        hard cheese, which would continue to exert competitive pressure on the Parties
        following the Transaction see (see Table 28). As recorded by this third-party data,
        Lactalis supplies several times smaller quantities than the number 1 supplier
        Zanetti and number 2 supplier Ambrosi. The results of the market investigation
        support the finding that Zanetti is an important competitive force.546 In addition,
        Italian-type cheese manufacturers Granarolo and Trentin were mentioned as
        alternative suppliers.547
(799)   Third, competition for Italian-type hard cheeses, which encompass products
        covered by a Protected Denomination of Origin, is less affected by brand presence
        in view of the predominant role carried by such denominations (Parmigiano
        Reggiano, Grana Padano). Therefore, it makes the assessment of a market only
        consisting of branded product much less significant in this context. In particular,
        the Parties submitted that brands carry little weight as the selling point is mostly
        the PDO branding. The presence of the PDO logos on a cheese wheel or bag of
        Parmigiano Reggiano ensures and indicates to the consumer that this cheese is
        produced, and the milk collected, exclusively in the PDO area, delivering
        recognition and quality perception expected from a brand. In line with this one
        competitor also explained: “The PDO brands enjoy high notoriety that it takes
        away “space” from private brands and indirectly attracts attention of private
        labels”.548
(800)   In light of the above and in particular given the very limited activities of Lactalis,
        the Commission considers that the Transaction will not substantially modify the
        market structure and will not remove a significant competitive constraint for
        branded Italian-type hard cheese in Denmark.
(801)   In its assessment of this market, the Commission also considered the arguments
        presented in the below section as regards the overall market, and in particular
        concerning the market structure, availability of alternative suppliers, absence of
        significant barriers to entry and expansion, and the limited competitive position of
        Lactalis.
(802)   In conclusion and based on the information available to the Commission and
        provided by Parties, the Commission finds that the Transaction does not raise
545   The combined value market shares for branded segment are in line with the volume shares provided
      by the Parties, and are also in line with the Parties’ position compared to panel data.
546   Questionnaire to customers (Q2), question 107, where it is considered as top 1 supplier for Italian-
      type hard cheese by a customer from Denmark expressing the views.
547   Questionnaire to customers (Q2), question 107.
548   Courtesy translation from Italian: “Il valore del brand PDO è talmente forte che toglie "spazio" ai
      Brand privati e, indirettamente, stimola l'attenzione delle private labels”; Questionnaire to customers
      (Q1), question 128.1.
                                                          121
 ---pagebreak---         serious doubts as to its compatibility with the internal market with regard to the
        plausible market of branded Italian-type hard cheeses in Denmark.
      (B)        Overall market for Italian-type hard cheese in Denmark
(803)   On the overall market for Italian-type hard cheeses in Denmark, based on the
        market share data submitted by the Parties and in light of the methodology
        described in Section 5.2 (see Table 28), the combined market shares of the Parties
        in volume terms in 2018 were: [20-30]% (Lactalis: [0-5]%; Nuova
        Castelli: [10-20]%).
                                                Table 28
                           Denmark 2018, Italian-type hard cheeses549
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]                [0-5]%
              Nuova Castelli - branded                     […]               [10-20]%
              Nuova Castelli – private label               […]                [0-5]%
              Combined Parties PL + B                      […]               [20-30]%
              Others - branded                             […]                [0-5]%
              Others – private label                       […]               [10-20]%
              Zanetti                                      […]               [40-50]%
              Ambrosi                                      […]               [10-20]%
              Total sales                                 1049                 100%
(804)   Since post-Transaction the Parties will have moderate combined market shares, the
        Commission considers that the Transaction does not raise serious doubts for the
        supply of Italian-type hard cheeses in Denmark under any plausible market
        definition for the reasons set out above, and also for the following reasons.
(805)   First, given that the Transaction brings about a small increment in market share
        ([0-5]%), the Commission considers that the concentration will not substantially
        modify the market structure for the supply of Italian-type hard cheese in Denmark.
(806)   Second, overall the large majority of customers in the market investigation
        indicated that it was possible to switch suppliers of Italian-type hard cheese.550 One
        Danish customer also explained that it is possible to switch suppliers for Italian-
        type hard cheeses: “I haven't tried but I suppose that it will be quite easy.” 551
(807)   Third, Lactalis depends on the supply from other manufacturers, such as […] or
        […], for its trading activity of Italian-type hard cheeses. While Nuova Castelli has
        limited overall shares of production in relation to PDO cheeses, it competes closer
        with those companies that are also active in production of PDO cheeses rather than
        only trading them.
549   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
550   Questionnaire to customers (Q2), question 109.
551   Questionnaire Q2, question 109.1.
                                                      122
 ---pagebreak--- (808)    Fourth, in contrast to other countries, the demand for Italian-type hard cheeses in
         Denmark concerns primarily branded products, while private label covers
         approximately [30-40]% of the overall demand. Nonetheless, based on the Parties’
         submitted data, the Commission observes the same, albeit not to the same extent,
         trend in Denmark of increasing share of private label segment (from [5-10]%
         in 2016 to [10-20]% in 2018). Based on the data provided by the Parties, Zanetti
         and Ambrosi are also active in the private label segment in Denmark.552 Given the
         very limited activities of Nuova Catelli in this segment (the recorded sales volumes
         of […], see Table 28), the Commission considers that it cannot be excluded that
         private label suppliers, at least to some extent, would continue to exert competitive
         pressure on the branded products suppliers.
(809)    Fifth, the Commission considers that it cannot be excluded that companies active in
         other national markets could potentially expand their activities in Denmark. In this
         regard, the Parties submitted that competitors in Italian-type hard cheese could
         easily expand and gain market shares in national markets, in particular referring to
         companies such as Zanetti, Ambrosi, Colla, Parmareggio.553 The majority of all
         customers expressing their views in the market investigation suggested that there
         are no significant entry or expansion barriers in terms of cost and time.554 The
         Commission notes that in the market investigation the Consortia for Parmigiano
         Reggiano has also indicated that in recent years there indeed have been several new
         entries into the national markets of companies who previously only had been active
         in Italy.555
(810)    Sixth, considering the impact of the Transaction, from all Danish customers that
         provided a view in the market investigation one indicated that the Transaction may
         lead to less supplier options. This customer has, however, also indicated that it is
         “confident that it can procure the desired quantities and quality from other
         suppliers”, as well as that it is “not concerned about logistics and distribution
         regarding other suppliers”.556 The other two customers expressing views indicated
         that the Transaction would not have a significant impact in any market for Italian-
         type cheeses.557
(811)    Finally, the Commission found that the Transaction does not raise serious doubts as
         to its compatibility with the internal market on the plausible market for branded
         Italian-type hard cheeses in Denmark.
(812)    Based on the above considerations and in the light of the results of the market
         investigation, the Commission considers that the Transaction does not raise serious
         doubts as to its compatibility with the internal market on the overall market for
         Italian-type hard cheese in Denmark.
5.10.4. Other markets
(813)    The Transaction results in additional affected markets in Denmark, and in
         particular in the plausible markets for branded buffalo milk mozzarella, ricotta,
         mascarpone and Gorgonzola, and for the overall (private label and branded) buffalo
         milk mozzarella, overall ricotta and overall Gorgonzola markets.
552     Parties’ response to Commission’s request for information RFI 22.
553     Form CO, paragraph 1060.
554     Questionnaire to customers (Q2), question 113
555     Questionnaire to competitors (Q1), question 135.1.
556     Non-confidential version of minutes of a call with a customer, 2 August 2019.
557     Questionnaire to customers (Q2), question 123; Questionnaire to customers (Q2b), question 18.1.
                                                         123
 ---pagebreak--- (814)     However, in all these markets the Transaction results in a negligible increment due
          to the small presence of Nuova Castelli based on its limited sales volume and the
          presence of other competitors in these markets.
(815)     On this basis the Commission finds that the Transaction does not raise serious
          doubts concerning these markets.
5.11. Portugal
(816)     Based on the market share data submitted by the Parties and in light of the
          methodology used by the Commission (see Section 5.2), the Transaction gives rise
          to an affected market in Portugal in cow milk mozzarella.
5.11.1. Cow milk mozzarella
(817)     Lactalis supplies branded cow milk mozzarella to retailers in Portugal. Conversely,
          Nuova Castelli supplies very small volumes of branded, as well as private label
          cow milk mozzarella.
        (A)         Branded cow milk mozzarella in Portugal
(818)     For branded cow milk mozzarella, first the combined Adjusted market shares of the
          Parties is [70-80]%, with a moderate increment of [5-10]%.558 The Transaction
          results in an affected market only because of Lactalis’ large market presence with
          branded products, sold under Galbani brand.559
(819)     Second, this is consistent with the fact that, in Portugal, Nuova Castelli does not
          enjoy strong brand presence in cow milk mozzarella, but focuses primarily on
          private label supplies of this product to retailers.
(820)     Third, several other credible competitors of Lactalis are active in the branded
          segment, for instance Zanetti, Solo Italia, Lago Maggiore and Valgrande. Overall,
          the Parties’ competitors in a plausible branded market have a solid presence in
          Portugal with competitive brands.
(821)     The market investigation supports the finding that a number             of credible competitors
          can and do offer volumes of branded cow milk mozzarella                 to retailers in Portugal
          and compete in the negotiations organised by retailers. Data            collected from retailers
          show that they have sourced from one or more suppliers                  other than the Parties
          in 2018.560
(822)     Therefore, the branded segment of the market will continue having a reasonable
          number of credible suppliers with established commercial relations with retailers in
          Portugal.
(823)     In its assessment of this plausible market, the Commission has               also considered in
          its assessment the arguments presented in the below section as               regards the overall
          market, and in particular concerning the availability of other                suppliers and the
          impact of the Transaction that also apply to the assessment of               branded cow milk
          mozzarella.
558     The combined value market shares for branded segment are slightly higher (by less than 5 percentage
        points) than the volume shares provided by the Parties, and both overestimate the Parties’ position
        compared to panel data.
559     Parties’ response to Commission’s request for information RFI 7, question 1.
560     Questionnaire to customers (Q2c), question 3.
                                                        124
 ---pagebreak--- (824)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the plausible market of branded cow milk mozzarella in Portugal.
      (B)        Overall market for cow milk mozzarella in Portugal
(825)   On the overall market for branded and private label cow milk mozzarella in
        Portugal, the combined Adjusted market shares of the parties is [30-40]%. (see
        Table 29 below).
                                                    Table 29
               Portugal 2018, Cow milk mozzarella561 – Adjusted market shares
              Competitor                              Sales, tons        Market Share
              Lactalis - branded                           […]               [10-20]%
              Nuova Castelli - branded                     […]                [0-5]%
              Nuova Castelli – private label               […]               [10-20]%
              Combined Parties PL + B                      […]               [30-40]%
              Others - branded                             […]                [0-5]%
              Others – private label                       […]               [50-60]%
              Solo Italia                                  […]                [0-5]%
              Lago Maggiore                                […]                [0-5]%
              Granarolo                                    […]                [0-5]%
              Negrini                                      […]                [0-5]%
              Total sales                                  962                 100%
(826)   The Commission observes that the overall market for cow milk mozzarella in
        Portugal appears to be fragmented, with several active players both in the branded
        and private label.
(827)   Beside the considerations concerning the structure and shares of the cow milk
        mozzarella market, the Commission considers that the Transaction does not raise
        serious doubts for the following reasons.
(828)   First, the Commission finds, based on the market investigation, that barriers to
        entry are not high for suppliers of cow milk mozzarella in Portugal, and that these
        barriers are mainly linked to the presence of relationships with local distributors.562
(829)   Second, as regards expansion, the market investigation suggested that a number of
        suppliers active in Italy and Germany could increase supply in the short term
        without incurring significant cost.
(830)   Third, as regards the impact of the Transaction, the vast majority of responsive
        retailers in Portugal believe that the Transaction will have no impact on their
        companies.563
561   For the reasons explained in Section 5.2.2., the Commission reports the Adjusted market shares for
      the plausible market of branded goods, as well as for the branded and private label goods market
      combined. As detailed panel data for private label is unavailable, the separate shares for private label
      are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the
      Parties’ presence in private label products.
562   Questionnaire to customers (Q2c), questions 11 and 12.
563   Questionnaire to customers (Q2c), question 18.2.
                                                      125
 ---pagebreak--- (831)     Finally, the Commission found that the Transaction does not raise serious doubts as
          to its compatibility with the internal market on the plausible market for branded
          cow milk mozzarella in Portugal.
(832)     Based on the above considerations and in the light of the results of the market
          investigation, the Commission considers that the concentration does not raise
          serious doubts as to its compatibility with the internal market on the overall market
          for cow milk mozzarella in Portugal.
5.11.2. Other markets
(833)     The Transaction results in additional affected markets in Portugal, and in particular
          in the plausible markets for branded buffalo milk mozzarella, ricotta and
          mascarpone; for private label Gorgonzola and for the overall (branded and private
          label) ricotta, mascarpone, Gorgonzola and Italian-type hard cheeses.
(834)     However, in all these markets the Transaction results in a negligible increment due
          to the small presence of Nuova Castelli based on its limited volume of sales or
          shares, and/or the presence of other competitors in these markets.
(835)     On this basis the Commission finds that the Transaction does not raise serious
          doubts concerning these markets.
5.12. Finland
(836)     Based on the market share data submitted by the Parties and in light of the
          methodology used (see Section 5.2), the Transaction gives rise to horizontally
          affected plausible market in Finland for cow milk mozzarella (Section 5.12.1) and
          other affected markets (Section 5.12.2).
5.12.1. Cow milk mozzarella
(837)     Lactalis supplies only branded cow milk mozzarella, whereas Nuova Castelli
          supplies mainly private label and branded cow milk mozzarella to retailers in
          Finland. The Commission notes that the main overlap giving rise to an affected
          market is in the segment for branded cow milk mozzarella. In light of this, the
          Commission will assess the likely effects of the Transaction on the branded
          segment and the overall market for the cow milk mozzarella in Finland.
(838)     The Commission notes that the Parties did not provide third-party panel data for the
          year 2018 to substantiate their estimates for the total market size and their market
          shares. Therefore, for this part, the Commission will rely on the volume market
          shares data as submitted and substantiated by the Parties.
        (A)         Branded cow milk mozzarella in Finland
(839)     For branded cow milk mozzarella, the Parties combined market shares would be
          [40-50]% (Lactalis: [20-30]%, Nuova Castelli: [20-30]%).564
(840)     First, considering panel data from 2017 provided by the Parties there were several
          competitors with higher market shares than Nuova Castelli, such as Granarolo or
         Juustoportti.565
564     The combined value market shares for branded segment are slightly higher (by less than 5 percentage
        points) than the volume shares provided by the Parties.
565     Parties’ response to the Commission’s request for information RFI 20, Annex RFI 20-1 - Panel data.
                                                        126
 ---pagebreak--- (841)   Second, the market investigation has indicated the presence of a significant number
        of alternatives for retailers in relation to the supply of branded cow milk mozzarella
        in Finland.566
(842)   In its assessment of this plausible market, the Commission has       also considered in
        its assessment the arguments presented in the below section as      regards the overall
        market, and in particular concerning the availability of other       suppliers and the
        impact of the Transaction that also apply to the assessment of      branded cow milk
        mozzarella.
(843)   In conclusion, in light of the above and based on the information available to the
        Commission and provided by Parties, the Commission finds that the Transaction
        does not raise serious doubts as to its compatibility with the internal market with
        regard to the plausible market of branded cow milk mozzarella in Finland.
      (B)        Overall market for cow milk mozzarella in Finland
(844)   For the overall market for cow milk mozzarella in Finland, based on the market
        shares data submitted by the Parties, their combined market share in 2018 does not
        amount to an affected market ([10-20]% in volume, Lactalis: [5-10]% and; Nuova
        Castelli: [10-20]%), However, for the sake of completeness, the Commission will
        assess this plausible overall market.
(845)   The Commission considers that the Transaction does not raise serious doubts for
        the supply of cow milk mozzarella under any plausible market definition for the
        following reasons.
(846)   First, according to the data submitted by the Parties, following the Transaction the
        merged entity will continue to face credible competitive constraints from the
        remaining competitors. Based on the Notifying Party’s estimates, there appears to
        be a significant number of alternative suppliers for private label cow milk
        mozzarella in Finland: Bayerische Milchindustrie: [30-40]% and Pirkka: [20-30]%.
        These competitors, in addition to the competitors active in branded products are
        likely to continue exercising significant competitive pressure on the merged entity.
(847)   Second, the Commission observes that, according to 2017 panel data, the demand
        for private label cow milk mozzarella represented [60-70]% of the overall market.
        Given that private label accounts for an important share of the overall market and
        the very limited activities of one of the Parties (Nuova Castelli: [5-10]% market
        share in 2017) on that segment, the Commission considers that it cannot be
        excluded that other private label suppliers, at least to some extent, would continue
        to exert competitive pressure on branded products suppliers.
(848)   Third, a Finish retailer that expressed its views during the market investigation
        indicated that the Transaction will have no impact on competition in relation to the
        supply of Italian-type cheese. 567
(849)   Finally, the Commission found that the Transaction does not raise serious doubts as
        to its compatibility with the internal market on the plausible market for branded
        cow milk mozzarella in Finland.
(850)   In light of the above and based on the information available to the Commission and
        provided by Parties, the Commission considers that the Transaction does not raise
566   Questionnaire to customers (Q2c), question 3.
567   Questionnaire to customers (Q2c), question 18.1.
                                                      127
 ---pagebreak---          serious doubts as to its compatibility with the internal market on the overall market
         for cow milk mozzarella in Finland
5.12.2. Other markets
(851)    The Transaction results in additional affected markets in Finland, and in particular
         in the plausible markets for branded buffalo milk mozzarella, ricotta, mascarpone
         and Italian-type hard cheese.
(852)    However, in all these markets the Transaction results in a negligible increment due
         to the small presence of Nuova Castelli based on its limited volume of sales or
         shares, and the presence of other competitors in these markets.
(853)    On this basis the Commission finds that the Transaction does not raise serious
         doubts concerning these markets.
5.13. Belgium
(854)    The Transaction results in additional affected markets in Belgium, and in particular
         in the plausible markets for the overall (private label and branded) cow milk
         mozzarella, overall buffalo milk mozzarella, overall ricotta and overall mascarpone
         markets.
(855)    However, in all these markets the Transaction results in a negligible increment due
         to the small presence of Nuova Castelli, which bring a very limited increment to
         Lactalis’ shares, and the presence of other competitors in these markets.
(856)    On this basis the Commission finds that the Transaction does not raise serious
         doubts concerning these markets.
5.14. The Netherlands
(857)    The Transaction results in additional affected markets in The Netherlands, and in
         particular in the plausible markets for branded cow milk mozzarella, buffalo milk
         mozzarella, ricotta and mascarpone, and for the overall (branded and private label)
         cow milk mozzarella, buffalo milk mozzarella, ricotta and mascarpone.
(858)    However, in all these markets the Transaction results in a negligible increment due
         to the small presence of Nuova Castelli based on its limited volume of sales or
         shares and the presence of other competitors in these markets.
(859)    On this basis the Commission finds that the Transaction does not raise serious
         doubts concerning these markets.
5.15. Spain
(860)    The Transaction results in additional affected markets in Spain, and in particular in
         the plausible markets for branded cow milk mozzarella, buffalo milk mozzarella
         and mascarpone, and for the overall (branded and private label) cow milk
         mozzarella and mascarpone.
(861)    However, in all these markets the Transaction results in a negligible increment due
         to the small presence of Nuova Castelli, bringing a very limited increment to
         Lactalis’ shares, and the presence of other competitors in these markets.
(862)    On this basis the Commission finds that the Transaction does not raise serious
         doubts concerning these markets.
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 ---pagebreak--- 6.    CONCLUSION
(863)  For the above reasons, the European Commission has decided not to oppose the
       notified operation and to declare it compatible with the internal market. This
       Decision is adopted in application of Article 6(1)(b) of the Merger Regulation and
       Article 57 of the EEA Agreement.
                                                    For the Commission
                                                    (Signed)
                                                    Margrethe VESTAGER
                                                    Executive Vice-President
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