By Jacob Bunge And Tom Fairless
BRUSSELS--European Union authorities have opened an in-depth
investigation into Cargill Inc.'s planned $440 million purchase of
Archer Daniels Midland Co.'s chocolate business amid concerns the
deal could lead to higher prices for sweets.
The European Commission, the EU's top antitrust authority, said
its preliminary investigation into the transaction, announced in
September, "showed potential competition concerns in the supply of
industrial chocolate to customers in Germany and the U.K."
The deal would expand the number of Cargill's chocolate and
cocoa facilities by one-third and extend a string of consolidation
in the industry. Cargill, already among the world's top industrial
chocolate producers, has called the acquisition a "major milestone"
in its growth strategy for the business.
Cargill and ADM--U.S. rivals that are among the world's largest
traders and processors of agricultural commodities--now anticipate
closing the transaction in mid-2015, a shift from earlier
projections that it would close by July, company representatives
said Monday. Both companies will work with EU regulators to address
their questions, they said.
The European Commission said it would make a final decision on
whether to approve the deal by July 8. It announced the in-depth
probe after some chocolatiers said they feared consolidation among
industrial producers could raise their prices and lead to
more-expensive candy for consumers.
"The proposed transaction could eliminate an important
competitor and reduce the choice of suitable suppliers in already
concentrated markets, which could lead to price increases," the
European Commission said Monday.
The commission's concerns follow recent signs of slumping
chocolate demand. In January, the European Cocoa Association
reported that cocoa-bean processing in Europe fell 7.4% in the
fourth quarter from a year earlier, a bigger-than-expected decline.
In North America, cocoa grinding slipped 2% over the same
period.
Cargill said in January that the data were a "sign of a weaker
demand environment" that the suburban Minneapolis company expected
to persist over the first three months of 2015.
Write to Jacob Bunge at jacob.bunge@wsj.com and Tom Fairless at
tom.fairless@wsj.com
Access Investor Kit for Archer Daniels Midland Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0394831020
Subscribe to WSJ: http://online.wsj.com?mod=djnwires