THE COMPETITION Authority is facing a substantial legal costs bill following its unsuccessful High Court defence of its refusal to permit the acquisition by Kerry Group of Breeo, the consumer foods company formed following the restructuring of Dairygold.

Mr Justice John Cooke, who last month allowed Kerry’s appeal against the authority’s decision, yesterday awarded 80 per cent costs of the eight-day appeal hearing to Kerry against the authority.

The judge said he was not awarding full costs against the authority because he had found in favour of some of its arguments, particularly regarding the issue of the closeness of private label products as a source of competition to various brands. He considered “a fair balance” would be struck by ordering that Kerry was entitled to recover 80 per cent of costs.

On March 19th last, the judge had allowed the appeal by Rye Investments Ltd, a wholly owned subsidiary of Kerry Group, against the authority’s determination last August prohibiting the proposed acquisition by Rye of Breeo Foods Ltd and Breeo Brands Ltd, two subsidiaries of Reox Holdings plc.

Dairygold Co-operative Society Ltd holds 26 per cent of the shares in unlisted Reox, with 7,500 shareholders, who are mainly members of Dairygold, owning the rest.

The proposed acquisition involved transferring from Dairygold to Kerry the consumer foods division of Reox (the Breeo companies), a number of properties, including plants at Mitchelstown, Co Cork, and Tallaght, and the intellectual property rights of its business and assets, including some 225 trademarks. The trademarks comprise many well-known brands, including Dairygold, Galtee, Shaws, Roscrea, Mitchelstown and Calvita. Kerry owns other well-known trademarks, including Denny, Ballyfree, Clover and Low Low. Both Breeo companies had a turnover of €200 million, with €166 million of that generated in the State.

The judge found the authority erred significantly in how it concluded the cheese product market was divided between natural and processed cheese and also ruled it erred materially in how it concluded the merger would mean substantial lessening of competition in the markets for rashers and non-poultry cooked meats.