Completed acquisition by Cadbury Schweppes plc of Green & Black's Limited

Affected market: Chocolate confectionery, hot chocolate drinks

No. ME/1777/05

Please note that the full text of the decision can be downloaded by using the link on the right. What follows are extracts regarding the parties, the transaction, jurisdiction, third party views, assessment and decision.

The OFT’s decision on reference under section 22 given on 31 August 2005. Full text of decision published 6 September 2005.

PARTIES

Cadbury Schweppes plc (Cadbury) is an international company whose principal businesses are the manufacture and sale of sugar and chocolate confectionery products and soft drinks.

Green & Black’s Limited (Green & Black’s) supplies organic chocolate and chocolate related products. In the last financial year Green & Black’s turnover in the UK was just over £20 million.

TRANSACTION

On 11 May 2005, Cadbury acquired all of the shares in Green & Black’s. The administrative timetable in this case expires on 2 September 2005.

JURISDICTION

As a result of this transaction Cadbury and Green & Black’s have ceased to be distinct. The parties have a combined UK share of supply in block chocolate of around 37 per cent; therefore the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.

THIRD PARTY VIEWS

The majority of third parties who responded to our inquiries in the context of this merger inquiry were unconcerned. A limited number of third parties raised concerns relating to a potential increase in Cadbury’s portfolio power and its market power in certain types of chocolate. However, the small increment resulting from this transaction in respect of chocolate confectionery, and the presence of a number of significant competitors post-merger, in combination with relatively low entry barriers in respect of niche and premium products, lead us to conclude that these concerns are not warranted in the circumstances of this case.

ASSESSMENT

The activities of the parties overlap primarily in the supply of chocolate confectionery and in the supply of cocoa-based hot beverages. In chocolate confectionery, while Cadbury remains the largest supplier in the UK, the increment to its share of supply is very small and the parties’ products are not close substitutes. Furthermore there remain a number of strong competitors to whom customers could switch.

In respect of cocoa-based hot beverages, Cadbury is the leading brand in the sector, and the accretion of its share of supply as a result of this transaction is significant.  However, the products of the parties are not close substitutes.  Moreover, the parties submit, and third parties confirm that barriers to entry in the supply of cocoa-based hot beverages are relatively low and new entry does occur, particularly in respect of niche and premium products.

Consequently, the OFT does not believe that it is or may be the case that the merger has resulted or may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

DECISION

This merger will therefore not be referred to the Competition Commission under section 22(1) of the Act.

Back to top