Mars’ $36bn acquisition of snacking giant Kellanova has been given the green light, after an “in-depth investigation” of competition concerns by the European Commission (EC).
Clearing the deal unconditionally, the EC said that while both Mars and Kellanova already enjoy “a degree of market power”, and the merged entity might link different product categories when negotiating with retailers, there was no evidence the merger would increase Mars’ bargaining power with retailers.
The deal will bring together two giants of the snacking industry, with brands including Pringles, Pop-Tarts and former Kellogg’s non-US cereals folded into Mars’ portfolio of confectionery, chewing gum, petfood and convenience foods.
“We looked very carefully at this deal to make sure Mars would not gain extra power over retailers, power that could lead to, for example, higher prices for shops and, ultimately, for consumers,” said the EC’s executive VP for clean, just and competitive transition Teresa Ribera.
“Our review found no evidence that this risk exists, so we have decided to approve the acquisition. We will continue to make full use of our powers under the Merger Regulation to ensure competition keeps food prices affordable.”
The Commission found that consumers of Mars and Kellanova’s products were not so loyal to the brands as to switch supermarket if they could not find them at their usual supermarket.
The nature of Kellanova’s products – long shelf life, the object of impulsive and infrequent purchases – made them unlikely to add to Mars’ bargaining power, the EC said.
The Commission also dismissed the idea of a “basket effect”, where consumers might switch their entire shopping basket to another supermarket if Mars-Kellanova’s products were missing at their main retailer.
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