Danone & WhiteWave merger cleared by European Commission with divestment of ‘growing-up milk’ in Belgium

16-Dec-2016 - Last updated on 16-Dec-2016 at 15:53 GMT

The European Commission is giving final clearance to the Danone and WhiteWave merger subject to conditions.

The acquisition of WhiteWave by international dairy giant Danone has received final clearance by the European Commission under the EU Merger Regulation.

The estimated $12bn merger gained clearance from the European Commission under the condition that Danone would divest from its “growing-up milk” business in Belgium.

Growing-up milk products are intended for children between 1 and 3 years of age and are intended to compensate for any nutritional deficiencies that may occur in the transition phase of infant nutrition to the overall family diet.

The “growing-up milk” market includes both dairy and plant-based products, including WhiteWave’s Alpro brand, headquartered in Belgium.

Denver-based WhiteWave, a manufacturer of plant-based packaged products, announced in November that the completion of the deal would be delayed until the first quarter of 2017.

European Commission's competition concerns

The commission took a look at the effects the proposed transaction would have in the markets for "growing up milk," yogurts, and desserts.

The largest finding was that the proposed transaction would leave only one other competitor, Nestlé, on the market for "growing-up milk" in Belgium. The commission had concerns that the merged entity would not have faced sufficient competitive pressure from the remaining player in this market.

Another concern raised by the commission was that there would be no other competitor in the plant-based "growing-up milk" segment in Belgium, where only Danone and Alpro are active. This would have left Belgian consumers with no alternative to the merged entity in this market.

The commission found no competition concerns with respect to other products concerned by the transaction, such as yogurts and desserts. The transaction is mostly complementary since Danone, with minor exceptions, is active mainly in dairy products, whereas Alpro specializes in the plant-based segment.

Danone addresses concerns

Danone agreed to divest a large part of its “growing-up milk” business in Belgium, entirely removing the overlap between the companies invested in this specific market.