Dutch court overturns decision to block bakery merger

The ACM was concerned that the acquisition of Dutch baking company A.A. Ter Beek by rival baking company, Continental Bakeries, would result in a very strong player in the production and sales of rusks, with a combined market share of 70-80%. The ACM defined the relevant product market as consisting of rusks only, excluding other bread substitutes such as crackers and biscuits. It considered the upstream market to include branded as well as private label rusks due to:

• the substitution between private label and branded rusks downstream
• the fact that producers of private label rusks and/or branded rusks and retailers in their upstream negotiations take into account the downstream competition between private label and branded rusks.

On appeal, the parties claimed, amongst other things, that private label rusks and branded rusks constituted separate upstream markets, particularly due to the different procurement procedures. But the District Court found that it had no reason to doubt the ACM’s market delimitation, as outlined above. The parties had not substantiated their claim with a private investigation. Additionally, the Commission decisions they had mentioned as precedents were too case-specific to apply to this matter.

However, on further appeal, the Trade and Industry Appeals Tribunal agreed with the parties and ruled that the ACM had neglected to substantiate why there was one upstream market for private label and branded rusks. Even if upstream producers of private label and branded rusks themselves and the retailers dealing with these producers take account of the substitution between private label and branded rusk on the downstream market, this does not necessarily imply that the producers’ market behaviour is disciplined in such way that there should be one single product market.