Good morning,
The European Commission today has adopted two merger decisions, on the Unilever / Sara Lee and Syngenta / Monsanto cases.
We have approved both mergers on condition that the companies provide remedies to protect consumers in the affected markets.
Unilever / Sara Lee
Let me start with the proposed acquisition of the household and body care businesses of Sara Lee by Unilever. Our investigation concerned mostly the deodorant business. Unilever owns the Axe, Dove and Rexona brands; Sara Lee owns Sanex. These are brands that consumers, and yourselves, are familiar with.
This not the first merger we are reviewing involving Sara Lee, which is selling a broad category of its activities. We have already cleared the acquisition by Procter & Gamble of its air fresheners business and are presently looking at the sale of its insecticides division to SC Johnson, which was notified at the beginning of this month. I expect a decision before Christmas.
Coming back to the merger we have analysed today, in our detailed investigation, we looked for areas where both companies sell similar goods and we found that Unilever competed closely with Sara Lee in the sale of deodorants in a number of countries. We found no significant concerns with the other products and national markets.
If the merger had gone ahead as originally planned, consumers would risk higher prices in the countries where these brands and products currently compete. We put these concerns to the parties.
We had a constructive dialogue with Unilever and they ultimately offered to divest the Sanex brand in full - deodorants and shower & bath products - for all countries in Europe.
This is an excellent solution because consumers will benefit from preserving the integrity of the Sanex brand. This is a clear cut, structural remedy.
The remedy eliminates the overlapping activities, eliminates the competition concern, and eliminates the risk that consumers would face higher prices as a result of the merger.
Syngenta / Monsanto
The second merger that we have approved today concerns the purchase by Syngenta of Monsanto's global sunflower seeds business. Sunflowers are mainly used for the production of vegetable oil for cooking, a product for which there is a large and increasing demand.
This case was originally notified in Spain and Hungary, but the competition authorities there referred it to the Commission.
Our concern was that Syngenta would have had control over a large number of different hybrid varieties of sunflower seeds and that this risked leading to higher prices in Spain and Hungary. Moreover, Syngenta would have been in a position to restrict its competitors' access to key research and development needed to develop new seeds. Sunflower hybrids are developed through the breeding and crossing of parental lines. Before a sunflower hybrid is commercialised, both the hybrid and the parental lines used in its development are registered, after successfully completing the official trials.
The parties have agreed that in Spain and Hungary, they will divest those seed varieties that Monsanto has already commercialised or started trials for, as well as the parental lines of these hybrids. The purchaser will be able to commercialize new hybrids based on the parental lines in the whole of the EU and in other countries.
Again, this is a clear cut, structural remedy.
It eliminates the overlap, the competition concern and the risk that farmers and, ultimately, consumers would pay higher prices. It also ensures that innovation is not reduced by the merger.
Both of these cases show how our merger control system works. We have avoided the risks of higher prices for buyers of sunflower seeds in Syngenta, and deodorants in Unilever. We have put in place clear, structural remedies. We have given the parties legal certainty and they can now go forward with their mergers.
General policy and trends
A constructive approach by merging companies is important, in particular as we may be entering a phase of restructuring following the economic crisis.
Companies need to be aware that some sales – particularly to companies that are already market leaders - may lead to competition concerns. If we think that such a sale may lead to higher prices to consumers, we will have to intervene.
As you know prohibitions are very rare: only two in the last eight years and only 20 in total (with some other cases being withdrawn) since 1990, when the Merger Regulation came into force, 20 years ago.
In those cases where a merger poses problems we are generally able to find remedies with the parties.
So we do not stand in the way of the emergence of companies with a global reach. Mergers and acquisitions are an important part of a healthy economy and, in the case of European companies, of a competitive Europe. We only intervene when the proposed mergers create competition problem – when they would lead to higher prices or lower innovation.
Looking at figures, merger control activity remained relatively stable this year, at about two-thirds the level of the Commission's all-time busiest year of 2007. This is a reflection of the global slow-down.
This year we estimate that we will have received just over 260 notifications by the end of the year which is essentially the same as 2009.
There are some signs of growth in activity however, with more preparatory work for notifications being done than a year ago, and we currently have more major cases ongoing than last year.
At the same time, the cases are a little more complex, with only about half being simplified cases, compared to 60% in recent years. So I will come again to this press room to inform you about merger decisions, no doubt. And I hope that, every time, together with the parties, we will be able to find the solutions that will protect the interests of consumers while allowing them to grow to the scale to take on global competitors.
Thank you.
