Analysis of the Kraft Food- Cadbury Merger

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Table of contents

II.The case5
III.Analysis: competitive assessment6
1)Confectionery sector overview.7
2)Relevant product market9
3)Relevant geographic markets11
4)Unilateral Effects 11
IV.Our results: pro-collusive effects and efficiency gains.14 V.Conclusions15

Kraft is a worldwide food and beverage company active in more than 150 countries with annual revenues of $48 billion while Cadbury is a worldwide producer and seller of chocolate and sugar confectionery products in over 60 countries. As stated by the European Commission: “Both Kraft and Cadbury are strong players in the chocolate confectionary business in the European Economic Area. With its main chocolate brands Milka, Côte d'Or and Toblerone, Kraft has a very strong presence in most Member States, with the exception of the UK and Ireland where customers' preferences remain strong for traditional British chocolate. Cadbury is the market leader in the UK and Ireland, in particular with its brand Dairy Milk, while in continental Europe it is mainly active in France, Poland, Romania and Portugal, through local brands which it previously acquired.” (European Commission, 2010) Kraft Food welcomed the merger with Cadbury with the following statement: “The combination would build on Kraft Foods' position as a global powerhouse in snacks, confectionery and quick meals with a rich portfolio of iconic brands.” (Kraft Food Inc., 2010) Of course, the merger is here presented as producing gains for the vastest majority of stakeholders but it was the concern of the European Commission to verify that those gains would have not been offset by the losses it may create. In fact, the ratio laegis of the Merger Regulation is to impede those activities which can be detrimental for the society and reduce economic welfare. In this framework competition plays a major role. In fact, in the definition provided by the European Commission a...
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