CELEX: 32015M7709
Language: en
Date: 2015-09-14 00:00:00
Title: Commission Decision of 14/09/2015 declaring a concentration to be compatible with the common market (Case No COMP/M.7709 - BRIGHT FOOD GROUP / INVERMIK) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 14.9.2015
C(2015) 6390 final

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|To the notifying party:                                                |                                                                       |

Dear Sirs,

Subject:    Case M.7709 – Bright Food Group/ Invermik
Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1] and Article 57 of the Agreement  on  the  European  Economic
Area[2]

    1) On 12 August 2015, the European Commission received notification of  a  proposed  concentration  pursuant  to  Article  4  of  the  Merger
       Regulation by which the undertaking Bright Food (Group) Co., Ltd. (‘Bright Food Group’, People’s Republic of  China)  intends  to  acquire
       within the meaning of Article 3(1)(b) of the Merger Regulation sole control of Invermik, S.A. and its following wholly-owned subsidiaries:
       Miquel Alimentació Grup, S.A.U.; Miquel Alimentació Food Service,  S.L.U.;  Miquel  Alimentació  Food  Service  Canarias,  S.L.U.;  Miquel
       Alimentació Grup CM Canarias, S.L.U.; and Miquel Alimentació Grup Colombia, S.A.S. (‘Invermik’, Spain), by way of  acquisition  of  shares
       (the ‘Proposed Transaction’).[3] Bright Food Group is hereinafter referred to as  the  ‘Notifying  Party’  while  Bright  Food  Group  and
       Invermik are together referred to as the ‘Parties’ or the ‘Merged Entity’.

       THE PARTIES AND THE OPERATION

    2) Bright Food Group is a food industry group based in Shanghai, the People’s Republic of China. It is active in food processing,  production
       and distribution of food products. All shares in Bright Food Group are ultimately held by the Shanghai State Owned  Assets  Administration
       Commission (‘Shanghai SASAC’). Companies within the Bright Food Group that make sales in the European markets include Diva  (France,  wine
       distributor), Manassen (Australia, food distributor), Salov (Italy, olive oil producer), Synlait  (New  Zealand,  dairy  producer),  Tnuva
       (Israel, dairy producer) and Weetabix (United Kingdom, cereals and cereal bars producer). With particular regard  to  Spain,  Bright  Food
       Group's activities are mainly limited to the sales of cereals and cereal bars produced by Weetabix.

    3) Invermik is active in the wholesale and retail sale of daily consumer goods, including wholesale  cash  &  carry  services,  primarily  in
       Spain.

    4) On 1 July 2015, Shanghai Tangjiu (Group) Co., Ltd., a fully-owned subsidiary of the Bright Food Group,  entered  into  a  share  sale  and
       purchase agreement with the present owners of Invermik. Following the completion of the transaction, all shares in Invermik will  be  held
       by Bright Food Holding (Spain) Co., Ltd, a special purpose vehicle incorporated for the purposes  of  the  transaction.  The  Bright  Food
       Group, indirectly via Shanghai Tangjiu (Group) Co., Ltd., will hold […]% of the shares in  Bright  Food  Holding  (Spain)  Co.,  Ltd.  The
       remaining shares will be held […].

    5) The minority shareholders in Bright Food Holding (Spain) Co., Ltd. will not hold any veto rights that go beyond those normally accorded to
       minority shareholders. The Bright Food Group will thus acquire sole control over Invermik.

    6) The Proposed Transaction therefore constitutes a concentration pursuant to Article 3(1)(b) of the Merger Regulation.

       UNION DIMENSION

    7) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million[4] (Bright Food  Group:  EUR  […];
       Invermik: EUR […]).  Each of them has a Union-wide turnover in excess of EUR 250 million (Bright Food Group: EUR […]; Invermik:  EUR  […])
       but they do not achieve more than two-thirds of their aggregate Union-wide turnover within one and the same Member State[5]. The  notified
       operation therefore has a Union dimension.

       INDEPENDENCE OF BRIGHT FOOD GROUP

    8) The Bright Food Group is ultimately owned by the Shanghai State Owned Assets Administration Commission (‘Shanghai  SASAC’).  The  Shanghai
       SASAC is an institutional legal entity authorised to administer state assets.[6]

    9) When assessing a concentration, it is necessary to first establish what are the undertakings involved in  the  transaction.  In  order  to
       maintain non-discrimination between publicly and privately held undertakings, the assessment must take account of undertakings  making  up
       an economic unit with an independent power of decision, irrespective of the way in which the undertakings’ capital is held or of the rules
       of administrative supervision applicable to them.[7] In cases concerning publicly-held companies, it is therefore also necessary to assess
       to what extent the company is independent from the state.

   10) In case of various government bodies owning companies, a question may also arise about any possible control  relationships  between  those
       bodies. In the present case, the relationship between the Shanghai SASAC, which owns the Bright Food Group, and other similar, regional or
       central, government bodies will arise if the Bright Food Group is not considered an independent economic entity  but  part  of  an  entity
       encompassing (at least) the Shanghai SASAC and all its controlled possessions.

   11) The Notifying Party submits that the Bright Food Group constitutes an independent economic unit that has an independent management able to
       autonomously and independently decide all relevant aspects of  the  company’s  activities,  including  its  market  behaviour.  It  should
       therefore not be considered part of the same economic entity with the Shanghai SASAC or other companies controlled by the Shanghai SASAC.

   12) The Notifying Party further submits that the Shanghai SASAC is independent from the central Chinese  SASAC.  According  to  the  Notifying
       Party, the Shanghai SASAC is integrated in the Shanghai municipal government and acts primarily in its own interest, not in  the  interest
       of the central government.

   13) The Notifying Party has nonetheless provided market information that includes all companies controlled by the central and regional SASACs,
       including but not limited to the Shanghai SASAC. The Proposed Transaction does not give rise to serious  doubts  about  its  compatibility
       with the internal market even under that basis. It is therefore not necessary to conclude on the control of the Bright Food Group for  the
       purposes of this case.

       RELEVANT MARKETS AND COMPETITIVE ASSESSMENT

1 Introduction

   14) Invermik's main activity is the wholesale of daily consumer goods through cash and carry outlets in Spain.  Bright  Food  Group  does  not
       carry out any activities in those markets. Therefore, there are no horizontal overlaps between the Parties.

   15) With regard to potential vertical links between the Parties resulting from the supply of food products  by  Bright  Food  Group  (upstream
       market) to cash and carry services, wholesalers and supermarkets (downstream market), the Bright Food  Group's  activities  in  Spain  are
       limited and only total approximately EUR […] a year. A clear majority of those sales are ready-to-eat cereals  and  cereal  bars  sold  by
       Weetabix, a part of the Bright Food Group. The sales of other products by the Bright Food Group are notably small and  they  will  not  be
       considered further in this decision.[8]  That vertical link gives rise to vertically affected markets in that Invermik has a market  share
       of 30% or above in certain regional cash & carry markets within Spain and the Bright Food Group makes sales  of  certain  products,  which
       could also be sold in cash & carry stores in Spain.

   16) Therefore, the Proposed Transaction concerns i) the upstream market for the supply of cereals  and  cereal  bars  in  Spain  and  ii)  the
       downstream market for cash and carry wholesaling in Spain.

2 Relevant markets

1 Upstream markets: Ready-to-eat cereals and cereal bars

1 Product market definition

   17) Ready-to-eat cereals (‘RTEC’) are made of different grains – for instance corn, wheat, oats or rice – and other ingredients such as  nuts,
       dried fruit, sweeteners and other additives that are processed into the final product.  The  products  can  take  various  forms  such  as
       extruded, flaked, shredded, gun-puffed or oven-puffed cereals or muesli.

   18) The Commission has previously considered that the market for RTEC products could potentially  be  further  segmented  into  (i)  all  RTEC
       products, (ii) RTEC products excluding muesli, (iii) muesli, (iv) RTEC products in ‘health’ category’, (v) RTEC products for children  and
       (vi) RTEC products for adults/family.[9] In line with a number of other consumer goods markets, the Commission has further considered that
       private label and branded RTEC products may constitute distinct markets.[10]

   19) The Notifying Party submits that all RTEC products belong to the same relevant market.

   20) Cereal bars, on the other hand, are products that can be eaten ‘on-the-go’. They are made of different cereals, nuts and  other  additives
       such as fruit and chocolate. The bars may also have a coating or decoration.

   21) The Commission has previously left the exact market definition for cereal bars open but has assessed them separately from  other  products
       even though it found in OEP / MSP-Stiftung / DVG / Dailycer Group that RTEC producers were generally also  active  in  the  production  of
       cereal bars and that retailers generally included cereal bars in their tenders for RTEC products.[11] The Commission has for many consumer
       goods considered possible segmentation between private  label  and  branded  products  and  has  also  assessed  cereal  bars  under  that
       distinction.[12]

   22) The Notifying Party submits that cereal bars either (i) belong to the same product market with RTEC products or (ii) form part of a larger
       market of snack products that consist of various products generally consumed between meals, such  as  cake  bars,  chocolate  bars,  bread
       substitutes, yoghurt and fruit.

   23) In any event, the Commission considers that the exact definition of the upstream product markets for cereals and cereal bars can  be  left
       open for the purposes of the present case as that definition does not ultimately influence the outcome of the  competitive  assessment  of
       the Proposed Transaction.

2 Relevant geographic market

   24) The Commission has previously left it open whether the relevant geographic market for  RTEC  products  and  cereal  bars  is  national  or
       European wide.[13]

   25) In any event, the Commission considers that the exact definition of the geographical upstream markets for cereals and cereal bars  can  be
       left open for the purposes of the present case as that definition does not ultimately influence the outcome of the competitive  assessment
       of the Proposed Transaction.

2 Downstream market: Cash & carry of daily consumer goods

1 Relevant product market

   26) Cash & carry is a type of self-service wholesale where customers provide for the transport and also typically pay for the  goods  in  cash
       rather than in credit. Cash & carry stores typically sell to bars, restaurants and cafés but not to private individuals. A cash and  carry
       store typically includes a wide range of different products and is not limited to one particular group of products.[14]

   27) The Commission has in the early Kesko / Tuko case concluded that the cash  &  carry  market  constitutes  a  market  separate  from  other
       wholesale of daily consumer goods.[15]  In certain other cases, the Commission has left the question open or even considered that there is
       a common wholesaling market comprising not only cash & carry but other types of wholesaling as well.[16]

   28) The Notifying Party submits that cash & carry form part of a wider market for the wholesale of daily  consumer  goods.  According  to  the
       Notifying Party, customers source similar products not only from cash & carry and other wholesale but directly  from  suppliers  and  from
       retailers as well.

   29) The Proposed Transaction only gives rise to affected markets if cash & carry is considered a distinct relevant market.

   30) In any event, the Commission considers that the exact definition of the downstream product market for the cash and carry of daily consumer
       goods can be left open for the purposes of the present case as the definition does not ultimate influence the outcome of the assessment of
       the Proposed Transaction even when considering the potential distinct cash & carry market.

2 Relevant geographic market

   31) While the Commission has generally considered the wholesale of daily consumer goods to be of  at  least  national  in  scope,  it  has  in
       previous cases concluded that the market for cash & carry is regional (smaller than national)[17] or left the question open[18].

   32) The Notifying Party submits that the market is national in scope.

   33) Given the nature of cash & carry wholesaling that serves small customers which pick up the  products  from  an  outlet,  it  would  appear
       reasonable that the geographic scope of the market is narrower than national.

   34) In any event, the Commission considers that the exact definition of the downstream geographical markets for the cash and  carry  of  daily
       consumer goods can be left open for the purposes of the present case as it does not ultimate influence the outcome of  the  assessment  of
       the Proposed Transaction under any alternative feasible market definition.

3 Competitive assessment of vertical links

   35) The Proposed Transaction gives rise to vertically affected markets between (i) Invermik’s cash & carry  operations  (downstream)  and  the
       Bright Food Group’s production and supply of RTEC products and cereal bars (upstream).

   36) Invermik operates 63 cash & carry outlets with a total of […] m2 surface area in 11 regions in Spain. The outlets are operated  under  the
       brand ‘Gros Mercat’. At the national level, Invermik’s market share is [10–20]%[19] and the Proposed Transaction does  not  give  rise  to
       affected markets if the relevant market is considered national.

   37) In the potential regional cash & carry markets, Invermik’s market shares range between [0–5]% and [50–60]%. The  market  shares  reach  or
       exceed 30% in three regions: (i) the Balearic Islands ([30–40]%), (ii) Catalonia ([40–50]%) and (iii) La Rioja ([50–60]%). In all of those
       three regions, Invermik is also the market leader with Makro being number two in the Balearic Islands ([20–30]%) and Catalonia  ([20–30]%)
       while H.D. Covalco is number two in La Rioja ([20–30]%).[20]

   38) In Spain, the Bright Food Group (Weetabix) only sells branded RTEC products and cereal bars, primarily under the  brands  Weetabix,  Alpen
       and Minis. Its primary competitors include companies such as Kellogg’s and Nestlé. According to the Notifying Party, the majority  of  the
       total RTEC and cereal bars market in Spain ([60–70]%) is held by private label products.

   39) Bright Food Group’s market share in the total RTEC and cereal bars market (including private label) in Spain was [0–5]%  in  2014  and  is
       estimated to be [0–5]% at present. In the potential sub-segment of  only  branded  products,  the  market  share  would  be  approximately
       [0–5]%.[21] While the Notifying Party has not been able to provide separate market shares for each of the potential  sub-segments  of  the
       market, it submits that the market shares on those sub-segments do not significantly differ from the market share in the total market.

   40) Given the Merged Entity’s limited market share ([0–5]%) on the upstream markets, the merged entity is unlikely to be  able  to  engage  in
       input foreclosure. The fact that Invermik does not at present source any products from the Bright Food Group also supports the  view  that
       their products are not ‘must-carry’ products in a cash & carry store. Input foreclosure concerns can therefore be excluded.

   41) As to customer foreclosure, the Merged Entity would have a notable  market  share  particularly  in  Catalonia  ([40–50]%)  and  La  Rioja
       ([50–60]%). However, a number of cash & carry competitors will remain active even in those regions, and any demand for RTEC  products  and
       cereal bars there is also only a fraction of the total demand in the upstream RTEC and cereal bars markets that are at least national.  On
       the national level, the Merged Entity’s cash & carry stores have a total market share of [10–20]%.  It  is  therefore  unlikely  that  the
       Merged Entity could, solely on the basis of it having notable market shares in some regional downstream markets, be able  to  deprive  its
       upstream competitors of an adequate customer base.

   42) Therefore, the Commission considers that any competition concerns can be excluded and that the Proposed Transaction does not give rise  to
       serious doubts about its compatibility with the internal market.

       CONCLUSION

   43) For the above reasons, the European Commission has decided not to oppose the notified operation and to  declare  it  compatible  with  the
       internal market and with the EEA Agreement. 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
Member of the Commission

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[1]   OJ L 24, 29.1.2004, p. 1 ('the Merger Regulation'). 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 275, 20.8.2015, p. 7.

[4]         Turnover calculated in accordance with Article 5 of the Merger Regulation and the Commission Consolidated Jurisdictional  Notice  (OJ
       C 95, 16.4.2008, p. 1).

[5]   Bright Food Group achieves two-thirds of its aggregate Union-wide turnover in the United Kingdom while Invermik achieves two-thirds of  its
       aggregate Union-wide turnover in Spain.

[6]   Form CO, paragraph 26.

[7]   Recital 22 of the Merger Regulation.

[8]   The Notifying Party has further explained that CNFC China National Fisheries Corporation  is  a  Chinese  state-owned  enterprise  that  is
       active in Spain, and that it makes limited sales of fishery products which could be distributed in cash & carry  markets.  However,  given
       its extremely limited market shares in the fishery products in Spain ([0–5]% by value according to the Notifying Party’s best  estimates),
       it will not be considered further in this decision.

[9]         M.4738 – OEP / MSP-Stiftung / DVG / Dailycer Group, paragraph 15.

[10]  M.4738 – OEP / MSP-Stiftung / DVG / Dailycer Group, paragraph 14.

[11]  M.4738 – OEP / MSP-Stiftung / DVG / Dailycer Group, paragraphs 17 and 39.

[12]  M.4738 – OEP / MSP-Stiftung / DVG / Dailycer Group, paragraph 39.

[13]  M.4738 – OEP / MSP-Stiftung / DVG / Dailycer Group, paragraphs 19–20.

[14]  See, e.g. M.1064 – Metro / Makro, paragraph 10. Also Invermik’s cash & carry stores offer a wide  range  of  products,  ranging  from  food
       stuff to drinks, cleaning products, furniture, perfumery products and electrical appliances among others.

[15]  M.784 – Kesko / Tuko, paragraph 31.

[16]  See, e.g. M.1064 – Metro / Makro, paragraph 12 and M.2161 – Ahold / Superdiplo, paragraph 15. In some other cases, the question about  cash
       & carry has not been discussed in the decision with respect to the whole sale of daily consumer goods. See, e.g. M.4293 –  Nordic  Capital
       Fund IV / ICA Meny, paragraphs 8–10.

[17]        M.784 – Kesko / Tuko, paragraph 32.

[18]        M.1064 – Metro / Makro, paragraph 13.

[19]  June 2015. In 2014, the market share was [10–20]%. The market shares have been provided by the Notifying Party and they are  based  on  the
       surface area of the cash & carry outlets.

[20]  The market shares provided by the Notifying Party are for June 2015 and they are based on the surface area of the cash & carry outlets.

[21]  Market shares are the Notifying Party’s best estimates.

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 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.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE