By a decision dated 10 October 2017, the Serbian Competition Commission has launched its first Phase II merger probe of 2017. The examined transaction pertains to the planned acquisition of a Serbian yeast producer (owned by the American Alltech) by the French giant Lesaffre. The in-depth investigation comes due to a market overlap in Serbia.
According to the preliminary analysis contained in the decision on the launch of the Phase II investigation, the combined market share of the parties exceeds 60% on at least two markets in Serbia: compressed baking yeast and dry baking yeast, respectively.
Specifically, on the market for compressed baking yeast, the acquirer’s market share in 2016 was between 60% and 70% and the target’s between 10% and 20%. On the other market where there is overlap (for dry baking yeast), the acquirer’s share in 2016 was between 60% and 70% while the target’s was less than 5%.
In Serbia, the Competition Commission shall open a Phase II investigation of a merger if the transaction would lead to a significant restriction of competition, in particular if the merger would lead to the creation or strengthening of a dominant position. And, together with other factors, an indicator of dominance is a market share in the excess of 40%.
Like in several cases in the past, it is expected that the key battle between the applicant and the Commission will be waged concerning the relevant geographic market – for some of the markets, the applicant has proposed that the geographic dimension be defined as European or even global. On its side, the Commission can be expected to continue with its narrow approach that the relevant geographic market can never be wider than Serbia.
The Commission announced it will be performing a market test concerning the planned combination, by contacting the parties’ customers and suppliers. The Phase II investigation must be completed within four months from its launch, meaning that the decision will come in February 2018 at the latest.