Presidencia de la Nación

Georgalos / Mondelez transaction – Objection Report

The National Commission for the Defence of Competition objected to the transaction by which Georgalos acquired assets of the firm Mondelez related to the production, distribution and marketing of Mantecol – a peanut dessert – and other sweets.

The Secretariat of Trade (SC, for its acronym in Spanish), following the opinion of the National Commission for the Defence of Competition (CNDC, for its acronym in Spanish), issued an Objection Report under the terms of Section 14 of Act 27.442 of Defence of Competition, concerning the transaction by which Georgalos acquired assets of Mondelez related to the production and sale of a variety of sweets.

The acquired assets include the brands Mantecol, Bazooka, Lengüetazo, Palitos de la Selva, Milka, Shot, Cadbury, Halls, Clight and Media Hora; a production facilty located in Buenos Aires; all the factory´s movable assets and those related to the distribution of the sweets; and the transfer of the plant´s personnel. The agreement also included the loan of the production lines for chewing gum sold under the brand names of Beldent and Beldent Infinit.
Georgalos is a company dedicated to the production and commercialisation of sweets, like chocolates (under the brand names Tokke and Full Maní, among others), candies (under the brand names Flynn Paff, Flynnies and Pequeños Placeres), cereal bars (under the brand name Flow Cereal), peanut dessert (under the brand name Nucrem) and nougats and confectionery (under the brand names Georgalos and Namur). Georgalos also markets breakfast cereal in bulk and under the brand name Flow Cereal and chocolate powder under the brand names Toddy and Zucoa. The company is vertically integrated in the processing of peanuts and in the production of peanut paste, which it uses as its own input for the production of peanut dessert, and also sells to other firms. In addition, the company manufactures hollow and flexo printed polypropylene conversion packaging for its own supply.
After analysing the effects of the transaction, the CNDC concluded that the transaction raises competition concerns in the peanut dessert market.

The transaction involves the reacquisition of the product and the flagship brand Mantecol, originally developed by Georgalos, which was sold to Mondelez a few years ago. As a result of the transaction, Georgalos, which currently markets peanut dessert under the Nucrem brand, would incorporate the market leader brand, Mantecol, and the installed capacity for its production and commercialisation, which would result in a highly concentrated market, with a 73% market share, considering the marketed volumes of the two brands: Mantecol (59%) and Nucrem (14%).

The CNDC and the SC issue an “Objection Report” whenever a notified transaction is considered to have the potentiality of restricting or distorting competition in a market. As a consequence, in this occasion, the parties will be called for a special hearing aimed at analysing possible measures to mitigate the negative effects on competition.

Furthermore, following the recommendation of the CNDC, in the present report, the SC issued a preliminary injunction to order the companies to maintain their activities separately until the merits of the case are resolved.

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