The European Commission has cleared without conditions the acquisition of Azucarera Ebro S.L. by Associated British Foods Plc (ABF). Azucarera is the leading sugar producer in Iberia and is owned by the Spanish company Ebro Puleva S.A. ABF is a British multinational food, ingredients and retail group, active in the sugar sector through its subsidiary British Sugar.

The Commission identified that the activities of ABF and Azucarera overlap with respect to the sale of sugar as both companies are active in similar geographic regions. However, despite this overlap, the Commission’s investigation confirmed that the merger would not lead to a significant change in the market structure and that the merged entity would continue to face several competitors.

Moreover, the Commission noted that the transaction would give rise to two vertical links: (i) in the upstream market for raw cane used for the production of cane sugar, because ABF is a large supplier of raw cane through its subsidiary Illovo; and (ii) in the downstream market for yeast, because Azucarera is an important producer of molasses, a by-product of sugar used in the production of yeast. The Commission’s investigation nevertheless found that the merged entity would not have the ability to close off competitors, because they would continue to have alternative sources of supply for these products.

The Commission therefore cleared the transaction without progressing to an in-depth, Phase II investigation. Completion of the transaction is expected at the end of April 2009.