In-depth review through extensive pre-notification stage and prolonged Phase I investigation
The Austrian Federal Competition Authority (AFCA) has cleared the merger between SalzburgMilch and Pinzgau Milch after a thorough examination of the market conditions carried out within the scope of an extensive pre-notification stage and a prolonged Phase I investigation. The review included detailed talks and expert interviews with parties affected by the merger and familiar with the market, i.e. agricultural businesses, dairy farms and raw milk collectors, as well as food retailers, in order to directly incorporate their knowledge into a forecast of the impact of the merger. The AFCA did not find that the merger would establish or strengthen a dominant market position or pose any other barrier to effective competition.
Distribution channels with sufficiently strong competition
Both SalzburgMilch and Pinzgau Milch sell their products, which include fresh milk, yoghurt, fruit yoghurt and various cheeses, on the dairy market as own brands and private labels. The main distribution channels are food retail outlets as a strong market counterparty on the Austrian market and also a relevant level of export activity. AFCA’s investigation showed that the merged company is exposed to a sufficiently strong competition within both of these distribution channels.
Survey of approximately 1,100 affected agricultural businesses
Because both companies maintain a strong market position in the area of raw milk collection in the province of Salzburg, the affected agricultural businesses were closely scrutinised. The AFCA sent requests for information to 1,100 agricultural businesses. Roughly 700 farmers active in Salzburg answered the AFCA’s questions (a response rate of 64%). The majority of respondents classed the likely effects of the planned merger on their own business as neutral to positive. This view was based on expectations of cost savings and the fact that the agricultural companies anticipated being able to benefit from better product marketing options. There has been very little direct competition between the merger applicants in relation to raw milk collection over the last few years.
Furthermore, the merger strengthens the cooperative organisation of dairy farmers, particularly in the case of the existing suppliers of Pinzgau Milch. The merged company will be 90% owned by the merged cooperative of Salzburger Alpenmilch Genossenschaft and Pinzgau Milch registrierte Milchliefer- und Besitzgenossenschaft, meaning it will be owned by the farmers themselves.