On 5 April 2017, the Swedish Competition Authority (the "SCA") approved Cloetta's acquisition of Candyking. Both parties are active on the wholesale market for bulk confectionary as well as the wholesale market for natural snacks. In addition, Cloetta is a producer and supplier of bulk confectionary to Candyking. Therefore, the SCA identified both a horizontal overlap between the companies' wholesale businesses and a vertical link between the parties.
The SCA concluded that the parties' common market share on the wholesale market for bulk confectionary would be between 40 and 50 percent. Such market shares could lead to the creation or strengthening of a dominant position. However, the SCA also considered the following factors:
- The market is dominated by procurement procedures, which means that the market shares are changing depending on who wins and who loses larger contracts.
- The combined entity would still be subject to competition from other actors on the market.
- There are no substantial barriers to entry the market.
- The countervailing buyer power is not insignificant.
As concerns the wholesale market for natural snacks, the parties combined market share would only be around 20 percent. Therefore, the SCA found that there was no reason to believe that the concentration would significantly affect effective competition on the market. In addition, the combined entity would still face competition from other actors.
The vertical links identified could be harmful for competition if Cloetta refuses to supply the confectionary it produces to Candiking's competitors on the wholesale market, or only provides the confectionary to those competitors on significantly less favorable conditions. Negative effects on competition could also arise if Cloetta would foreclose competing producers of confectionary by total or partial exclusion of their products in its wholesale assortment. Such measures would also be harmful for consumers. However, the SCA found that it was not likely that Cloetta would engage in such behavior and that if Cloetta would reduce the share of competing producers' confectionary in its assortment, the producers would still have alternative sales possibilities.
Therefore, the SCA concluded that there was no reason to believe that the concentration would significantly restrict the existence or the development of effective competition within the country as a whole or a substantial part thereof and thus approved the concentration.
Source: Swedish Competition Authority Press Release 06/04/2017 and Swedish Competition Authority Decision 05/04/2017