Home | Publications | Kerry/Breeo Appeal : a Green Light to Anti-Competitive Mergers
Kerry/Breeo Appeal : a Green Light to Anti-Competitive Mergers
August 26, 2010 | Newspaper/Magazine Articles
Authors: Paul Gorecki Competition , Vol. 17 , Edition 3
, pp. 65-66
The article argues that a March 2009 High Court decision allowing the acquisition by the Kerry Group plc of Breeo Foods Limited and Breeo Brands Limited – which had been previously prohibited as substantially lessening competition by the Competition Authority – is based on a faulty analysis of countervailing buyer power. Countervailing buyer power refers to the ability of buyers – retailers such as Tesco and Dunnes – to constrain the power of food processors – such as the merged entity, Kerry/Breeo – to raise prices post-merger. To be effective countervailing buyer power requires alternative sources of supply that consumers view as sufficiently close substitutes for the products of the merged entity to make any post-merger price rise unprofitable. However, the High Court adopts a different test: there should be alternative sources of supply irrespective of whether or not they are close substitutes. Thus it is possible adopting this approach that distance substitutes would be found – incorrectly – to exert sufficient influence to constrain post merger prices increases. Hence the High Court decision – if upheld by the Supreme Court – is likely to permit anticompetitive mergers.
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