Further inquiry into Kerry's Breeo buyout

AN INVESTIGATION by the Competition Authority of food giant Kerry Group's proposed €165 million buyout of brands including Dairygold and Galtee is to be extended.

Last March, Kerry agreed to pay €165 million for Breeo Foods, which sells dairy and meat products under the Dairygold, Galtee and Mitchelstown brands.

The State's cartel and price-fixing watchdog subsequently carried out a phase-one investigation of the deal to ensure that it would not "substantially lessen competition" in any of the markets involved.

Yesterday, the Competition Authority said it was not possible to reach a conclusion at the end of its preliminary investigation, and that it intends to carry out a phase-two inquiry.

This will be longer and more detailed than the phase-one study, which took 30 days. The authority has until August 31st to come to a decision on whether or not the deal should go ahead. It could reach a conclusion before that.

The authority's spokeswoman explained yesterday that it was not uncommon for it to extend merger investigations into phase two, but said that it is often possible to make a decision during the preliminary phase.

While the agency has investigated a number of deals, it has never blocked any of them. However, it can attach conditions before allowing mergers or acquisitions to go ahead.

This year, Denis O'Brien's Communicorp had to sell local Dublin radio station FM104 as a condition of being allowed to buy national broadcaster, TodayFM.

Both Kerry and Breeo have businesses that are involved in the sale of foods, including sausages, juices, dairy products and sandwiches.

The authority's statement said yesterday that the investigation will focus on "the effect on competition in the sale and distribution of various consumer foods in the State".

Breeo Foods was spun out of Dairygold, the country's biggest farmer-owned co-operative. Both are headquartered in Cork. It turned over €188 million last year.

The Competition Authority is obliged to investigate any mergers where one of the parties' turnover in the State is €40 million or more, or if both parties' turnover amounts to €40 million or more worldwide.

It is also inquiring into the Scottish Newcastle bid for Heineken, as both have operations in the State, and venture capital group 3i's bid for pipe manufacturer Uponor.