Vj-19/1999/12
BESTFOODS HUNGARY LTD / GLOBUS CANNING FACTORY LTD
The Bestfoods Hungary Ltd (hereinafter: Bestfoods) as the only Hungarian undertaking of the Dutch group of companies applied for an authorisation of the Office of Economic Competition to acquire certain parts of the Globus Canning Factory Ltd (hereinafter: Globus).
According to the contract, made between the parties, Bestfoods purchases machines, equipment, know-how, industrial secrets, trademarks and industrial design in connection with producing and packing of mustard, ketchup, mayonnaise and sauces. Bestfoods stated in its application that the planned concentration will not result in dominance and disadvantageous consequences to consumers as well as it will not impede the continuation and development of competition, on the contrary, the concentration will promote the development, production and exportation of the products.
The Competition Council pointed in its decision, as far as the relevant products are concerned, to the presence of many different kinds of imported products on the Hungarian market which, together with the Hungarian products, are involved in a strong competition.
Although Bestfoods has 13, 5 per cent market share, on the market of mayonnaise, which will be 28, 8 per cent after the transaction, the concentration will not increase considerably since Bestfoods is not active on the market of the other products mentioned above and the market entry is relatively easy.
Apart from the purchasing clause the contract between the parties contained further two conditions which were considered restrictive by the Competition Council: (1) under the original plan of the parties Globus would not enter the market of relevant products within 10 years, which time limit was later reduced to five years; and (2) based on contract production, Globus will be the exclusive producing and packing undertaking of Bestfoods for four years.
In the view of the Competition Council the restriction does not outweigh the measure that is necessary to reach the targets of the concentration and accepted the argument of the applicants that a five-year period is necessary to protect the Bestfoods adapting to market. The Competition Council did not object to the four-year period for Globus exclusivity either.
Considering all the circumstances the Competition Council authorised the transaction.
March 17, 1999. Budapest
dr. Bodócsi András sk. előadó
Fógel Jánosné dr. sk.
dr. Sólyom Eszter sk.
Szabó Györgyi