Commission, December 9, 2019, No M.9413

Subject: Case M.9413 – LACTALIS  / NUOVA CASTELLI

Commission decision pursuant to Article  6(1)(b)  of Council  Regulation No 139/2004 (1) and Article 57 of the Agreement on the European Economic Area (2)

Dear Sir/Madam,

(1)     On 4 November 2019 the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (the 'Merger Regulation') by which Gruppo Lactalis Italia S.r.l. (Italy), belonging to the  Groupe Lactalis S.A. (together ‘Lactalis’, France) acquires within  the  meaning  of  Article 3(1)(b) of the Merger Regulation of the whole  of  Nuova  Castelli  S.p.A. (‘Nuova Castelli’ or  the  ‘Target’,  Italy),  a  wholly-owned  subsidiary  of  Nuova  Castelli Group S.p.A (‘NC Group’, France), in turn  controlled  by  Charterhouse Capital Partners (‘Charterhouse’, United Kingdom) by way of purchase of shares (Lactalis   and Nuova  Castelli  are designated   hereinafter   together  as the ‘Parties’). (3)

1. THE PARTIES

(2)     Lactalis produces and  supplies  cheese  such  as  mozzarella,  mascarpone  and  ricotta, as well as drinking milk, butter, cream and industrial  dairy  products  (milk  powder, whey, etc.). Lactalis focuses on branded products, although it also achieves sales in relation  to products  sold  under  retailers’  private  labels.

(3)     Nuova Castelli is a wholly-owned subsidiary of the NC Group,  […].  NC produces and sells various Italian cheeses, mostly hard cheeses and soft cheeses (mozzarella, Parmigiano Reggiano,  Grana Padano,  Pecorino,  ricotta,  etc.)  and  has  trading  activities in relation essentially to mascarpone, Feta and butter.  Nuova  Castelli specialises   in  the supply  of cheeses to retailers  to be resold  under  private   labels.

2. THE OPERATION

(4)     The industrial and commercial activities of the NC Group are  contained  within  the  Target. Nuova Castelli is currently undergoing a  legal  reorganisation;  however,  this  does not affect the  structure  of  its  ownership.  Additionally,  prior  to  the  closing  of  the acquisition, Nuova Castelli will have acquired sole control over  ILC  La  Mediterranea S.p.A. (‘Mandara’). These activities have been  taken  into  account  as part of the perimeter of the present Transaction for the purposes of its competitive assessment.

(5)     Pursuant to a Sale and Purchase  Agreement  (‘SPA’)  signed  on 29.5.2019,  Lactalis will acquire all issued  and  outstanding  shares  of  Nuova  Castelli  representing  100% of the share capital of the  Target.  Nuova  Castelli  will  therefore  be  solely  controlled by Lactalis   (the ‘Transaction’).

(6)     The  proposed  Transaction  therefore constitutes  a  concentration  within  the  meaning of Article   3(1)(b) of the  Merger Regulation. (4)

3. EU DIMENSION

(7)     The undertakings concerned  have  a  combined  aggregate world-wide  turnover  of  more than EUR  5  000  million (5) (Lactalis: […];  Nuova  Castelli: […]).  Each of them  has an EU-wide turnover in excess  of  EUR 250  million  (Lactalis:  […];  Nuova Castelli: […]), but each does not achieve more than two-thirds of its  aggregate EU- wide turnover within one  and  the  same Member  State.  The  notified  operation therefore  has an EU  dimension.

4. MARKET DEFINITION

4.1. Introduction

(8)     Both Parties are active in the  production  and  supply  of  dairy  products.  Their  activities   overlap   and   give   rise  to  affected  markets  in  (i)  the  procurement  of  milk;(ii)   the  production  and  sale  of  cheese  (notably  the  Italian-type  cheese  and  Feta) to retailers (6); (iii) the production and sale  of other  dairy  products (dairy-based  desserts) and (iv)  the  production  and sale  of butter. (7)

4.2. Procurement   of milk

(9)     Raw  milk refers  to  milk which  has  not  undergone  any  treatment (other  than cooling) and has a perishable nature. It  is  produced  by dairy farmers,  who  normally milk cows  twice  a  day.  Raw  milk  is  subsequently  stored  in  milk  storage  cool tanks at the farm which reduces its temperature to  4°  C.  Raw  milk  may  be  kept  on the dairy farm for one or two days. It is then delivered  to  (or  collected by)  dairy companies like the Parties, where it is pasteurised.  Once  pasteurised,  milk can  be  freely  traded and transported  over  long  distances.

4.2.1. Commission’s precedents

(10)    In previous  decisions,  the  Commission  considered  that  the  procurement of  milk should  be  divided  between  conventional  milk and   organic   milk. (8) The  Commission left the product market definition open in relation to  Germany (9)  and  Spain (10),  and assessed both segments  together  as a single   market  in  relation  to  Italy. (11)

(11)    The Commission also considered a further  segmentation  of  milk procurement  by species (cow, goat and sheep) because of  the  limited  substitutability  of  the downstream  end products,  but  eventually  left  the  product market  definition  open. (12)

4.2.2. Notifying Party’s view

(12)    According to the  Notifying  Party,  Lactalis   procures  almost   exclusively   conventional  milk in  Italy (13) and  that  Nuova  Castelli has  just   started  collecting limited   volumes   of organic milk. (14)

(13)    The Notifying  Party  submits  that  segmenting  milk procurement based  on  conventional or non-organic milk or by  species  is  not  relevant, (15) given  that  the  Parties’ activities only  overlap in  the  market  for  the  procurement  of  conventional  cow milk.

(14)    The Notifying  Party  submits  that  the  product  market  definition  may  be  left  open as it  has no bearing  on the  assessment  of the  Transaction. (16)

4.2.3. Commission’s assessment

(15)    As the Transaction does not raise serious doubts as  to  its  compatibility  with  the  internal market with respect to the market  for  procurement  of  milk under  any  plausible product market definition, the question whether the  market  for the  procurement  of milk   should  be further   segmented  can be left   open.

4.3. Supply  of Italian-type  cheese and Feta

4.3.1. Distinction of Italian-type cheese and Feta by category

(16)    The Notifying Party refers to mozzarella, mascarpone  and  ricotta as  Italian  fresh cheese; to Gorgonzola as an Italian soft cheese; and  Parmigiano  Reggiano,  Gran Castelli, Grana Padano, Pecorino  and  Pecorino  Romano  as  Italian-type  hard cheeses. (17)   Feta is  a fresh  Greek cheese  made  from  ewe’s and goat’s milk. (18)

(17)    The  Parties  manufacture  and  trade  several  cheeses that  carry  a  protected designation of origin  label  (‘PDO’).  Nuova  Castelli manufactures  and  sells: Mozzarella  di  Bufala Campana,  Gorgonzola,  Parmigiano  Reggiano,  and  Grana Padano. Nuova Castelli also trades  PDO  Feta.  Lactalis  manufactures  PDO Gorgonzola  and  PDO  Feta,  and  it  trades  Mozzarella  di  Bufala Campana, Parmigiano   Reggiano,   and Grana Padano.

4.3.1.1. Commission’s  precedents

(18)    The  Commission  has  previously  distinguished  between  different  categories   of cheeses such as “fresh cheese”,  “soft  cheese”,  “semi-hard  cheese”,  and  “hard- cheese”  among others. (19)

(19)    According to Commission’s precedents, each cheese category could be further segmented by type of cheese due to consumers’ preferences (20) or the unique characteristics of product. (21) In this regard, the Commission assessed  in  previous decisions whether an Italian-type cheese, mozzarella,  might  constitute  a  separate market.  The  precise  market  definition  was ultimately  left  open. (22)

(20)    In Lactalis/Galbani, the Commission also considered whether each type of cheese  could be further sub-segmented by the type of milk used  for  its  production.  In particular,  the  Commission   analysed   whether   cow   milk   mozzarella   and   buffalo milk mozzarella  might  belong to separate  product  markets,  notably due  to differences in taste and  price.  The  precise  market  definition  was  ultimately  left open. (23)

(21)    Additionally, in a previous  case,  the  Commission  considered  further  sub- segmentations of blue cheese by specialties; however, it ultimately  left  the  precise  market  definition  for blue  cheese open. (24)

(22)    In previous  cases,  the  Commission  has  considered  whether  segmentation  by  products protected by designation of origin could be  warranted.  The  Commission  noted  such  segmentation  could  be  justified   given  that  consumers  may  attach  value to  the  designation  of  origin, while  producers  are  constrained by   specific   rules (e.g. origin, ingredients, manufacturing process, etc.). However, the precise market definition  was left  open. (25)

4.3.1.2. Notifying  Party’s  view

(23)    The Notifying Party argues that the relevant market could be segmented by cheese category, i.e. hard-cheese, fresh cheese, soft cheese; however, it submits that further segmentation by type of cheese  does  not  appear relevant  for  the  supply  to  retailers of Italian-type  branded  and private  label  cheese products. (26)

(24)    As regards the supply of branded  products  to  retailers,  the  Notifying  Party  argues  that a segmentation based on the type of cheese does not  always  reflect  consumer habits; in particular with regard to Italian-type hard cheeses. (27)  The  Notifying  Party  claims that, from a  demand-side  perspective  based  on  consumers’ consumption habits  across  different  European  countries  except  most   likely   Italy,   Italian-type hard cheeses, such as Grana Padano, Parmigiano Reggiano and Pecorino, are substitutable because all cheese types can  be  used  for the  same consumption occasion, i.e. in pasta dishes. (28) The Notifying Party also explained that suppliers of Italian-type hard cheeses, such as Parmigiano Reggiano and  Grana  Padano  with  the PDO label,  produce  also their  equivalents   without   the label. (29)

(25)    With regard to the supply of  private  label  Italian-type  cheese  to  retailers,  the Notifying Party submits that the segmentation by type of cheese does not appear relevant. (30) First, the Notifying Party argues that in  the  supply of  private  label Italian-type cheese the relevant factor is the capabilities of suppliers to respond to requirements of the tenders and not consumer  preferences. (31)  According to  the Notifying  Party,  various   types  of  cheese  can  be  easily  manufactured  by  the same producers and they could belong to  the  same  market. (32)  Second, the  Notifying Party also submits that some fresh cheese types are sold together to retailers  under  one  contract  and the same  price  (for  example,  ricotta  and mascarpone). (33)

(26)    As regards the segmentation of cheese  based  on  the  type  of milk  used  to  produce that cheese, the Notifying Party submits that, from the point of view  of consumers,  buffalo milk mozzarella and cow milk mozzarella  are  substitutable  because  both products  satisfy  the same  need  and there  is a correlation  between their   prices. (34)

(27)    Concerning  geographical  indications,  the  Notifying  Party  explains   that  the   labelling of PDO products is  subject  to  stringent  rules  and  requires that  the  product originates in a specific region and that  the  ingredients  originate  and  the  production  takes place in the  defined  geographic  area.  Accordingly,  only  producers  located  in  the  specific  regions  are able  to produce  PDO cheese.

(28)    The manufacturers of Italian-type PDO cheeses are organized in consortia. These consortia require their members to manufacture PDO cheeses from  Italian  milk produced  in  specific  Italian  regions.  For  example,   for   Parmigiano   Reggiano   the milk must come from the  provinces  of Bologna  to  the  left  of Reno  river,  Mantua  to the  right  of the  Po river,  Modena, Parma  and Reggio   nell’Emilia. (35)

(29)    However,  the  Notifying  Party  argues that  segmenting  the   market   based geographical indications such as PDO  does  not  reflect  the  nature  of competition  on the market. (36)

(30)    The Notifying Party also submits that private label  products  are  substitutable  irrespective of the place of where they  are  manufactured  and  the  origin  of  milk  used. (37) The Notifying Party explains that mentioning the  country  of  origin  of  the  product is voluntary and submits that retailers procure mozzarella, mascarpone  and  ricotta without  giving  consideration  to  the  country  of origin. (38)  As  regards  the  origin  of milk,   some products  carry the  indication  that  milk   is  of “EU  origin”.  […]. (39)

4.3.1.3. Commission’s  assessment

(31)    The market investigation  confirmed  the  previous  segmentation  of  supply  of  cheese  by categories. The majority of responsive customers indicated that the different Italian-type cheese categories (e.g. fresh cheese, soft  cheese,  semi-hard  cheese  and hard cheese)  were  not substitutable   among  each other. (40)

(32)    Moreover, the  results  of  the  market  investigation  also point  to a  further segmentation between types of cheese within these categories for most of  the concerned  products (Italian-type  cheeses and   Feta).

(A)     Mozzarella

(33)    The vast  majority  of  customers responding  to  the  market  investigation  considered that mozzarella is not substitutable with  any  other  type  of  cheese. (41)  Customer explained that “[m]ozzarella is too specific and  creates a  specific market” (42)  and  that “[i]t is very hard to find the same taste and texture in another product”. (43)

Cow and buffalo milk mozzarella

(34)    The results of the market investigation also indicate  that, contrary  to  what the Notifying  Party argues,  cow and  buffalo   milk   mozzarella   are not substitutable.

(35)    First, the large majority of customers and competitors that responded to the market investigation  indicated  that  cow  milk and  buffalo milk mozzarella   are   not substitutable at all or only partially substitutable in terms of price and product characteristics. (44) As a  customer  explained: “The  quality  of  the  product  is superior in buffalo milk. The taste is more pronounced. The price is higher. Many consumers of mozzarella di bufala do not buy mozzarella made of cow  milk  because they find the product tasteless and unattractive” (45)

(36)    Second, the majority of customers and competitors that responded to the market investigation indicated that buffalo milk mozzarella  commands  a  significant  price premium  (over  30% higher   than cow milk   mozzarella). (46)

(37)    Third, the large majority of  customers  expressing  their  views  submitted  that  even  if  the price of buffalo milk mozzarella  increased  by  5-10%  they  would  not  switch  to cow milk   mozzarella. (47) The  majority  of responsive  competitors   agreed. (48)

(38)    Fourth, from a supply-side perspective and  according  to  the  market  investigation,  there is no  substitutability  between buffalo milk mozzarella  and  cow  milk  mozzarella. (49)

PDO and country of origin

(39)    First, with  regard  to  buffalo milk mozzarella  carrying  a  PDO  label,  i.e.  Mozzarella  di Buffala di Campana, certain customers responsive to the  market  investigation indicated  that  PDO  carries  a  certain  premium  value  as  it  assures  quality. (50) However, the large majority of the customers that responded to  the  market  investigation  indicated  that  PDO  and  non-PDO  mozzarella  were  alternatives   in  terms  of price  and product characteristics. (51)

(40)    Moreover, the majority of responsive customers indicated that if prices of PDO mozzarella increased by  5-10%  end-consumers  will  switch  to non-PDO  mozzarella. (52) The  responses  from  competitors   were evenly split. (53)

(41)    Second, with regard to the country of origin  of  non-PDO  Italian-type  cheese  products  (including country of  origin  of  the  milk),   the   market  investigation  points at the fact that this is a factor of  differentiation  recognised by  end-consumers particularly in certain countries (e.g. Italy); however, the majority of  respondents  indicated that retailers do not impose any  specifications  as  regard  the  origin  of the  milk   of non-PDO Italian-type cheeses. (54)

(42)    Third, customers that responded to the market  investigation  were  evenly  split  between those that considered that mozzarella labelled “made in Italy” was  fully  or  largely substitutable by and mozzarella not labelled as made in Italy and those that considered  these  products  not  or only  partially substitutable. (55)

Conclusion

(43)    In light of the  results  of  the  market  investigation  and  for the  purpose  of  this decision, the Commission considers  that  mozzarella  constitutes  a  distinct  product market from other Italian-type fresh cheeses and that  it  can be further  segmented  by type  of milk   species  into  buffalo   milk   mozzarella   and cow milk mozzarella.

(B)     Ricotta

(44)    Ricotta and mascarpone are different types of fresh cheese that tend to be used  as cooking ingredients. (56) The  market  investigation  confirmed  that  they  belong to  separate markets.

(45)    First, the results of the market  investigation  indicate  that  the  large  majority  of customers consider that there are  significant  differences  between  ricotta and mascarpone  in  terms  of consumption  occasions  and prices. (57)

(46)    Second, the vast majority  of  customers  indicated  that  ricotta  is  not  substitutable  at  all or only partially substitutable with other type of cheeses in terms  of  price  and  product characteristics. (58) Moreover,  the  majority  of  competitors  that  responded  to the market investigation indicated that  customers do  not  switch  to  other  products when  prices  of ricotta increase. (59)

(47)    Third, from a supply-side perspective,  ricotta  is  made  from  whey,  a  left  over  from  the production of cheese (e.g. mozzarella and  mascarpone)  and  mascarpone  is produced from milk fat. (60) The majority of competitors that responded to the market investigation replied that producers of mozzarella could not  start  producing  ricotta without   incurring  in  significant  costs and in  a short  period  of time. (61)

(48)    Moreover, the majority of the respondents to the market investigation indicated that suppliers active in ricotta could not start producing and selling mascarpone without incurring  in  significant   costs and swiftly. (62)

(49)    Fifth, with regard to the country of origin of non-PDO Italian-type cheese products (including country of origin of the milk), as indicated in paragraph (41) above, the majority of responsive customers do  not  impose  any  specifications  as  regard  the origin   of the milk   of non-PDO Italian-type   cheese  products,  including  ricotta. (63)

Conclusion

(50)    In light of the  results  of  the  market  investigation  and  for the  purpose  of  this decision,  the  Commission  considers  that  ricotta constitutes  a  separate  product market  from  other Italian-type   fresh cheeses.

(C)     Mascarpone

(51)    As explained in Section (B) above,  the  market  investigation  confirmed  that  mascarpone  and  ricotta  belong  to separate markets.

(52)    First, the results of the market  investigation  indicate  that  the  large  majority  of customers consider that there are  significant  differences  between  mascarpone  and ricotta  in  terms  of consumption  occasions  and prices. (64)

(53)    Second, the  vast  majority  of  customers indicated  that mascarpone  is  not  substitutable at all or only partially by other type of cheeses in terms  of price  and product characteristics. (65) Moreover, the majority  of  the  customers  and  competitors  that responded to the market investigation indicated that customers  do  not  switch to other  cheeses  when prices  of mascarpone increase . (66)

(54)    Third, from a supply-side perspective, mascarpone is  produced  from  milk fat  and ricotta   is   made   from   whey,   a   left   over    from   the    production    of   cheese   (e.g. mozzarella and mascarpone). (67)  The  majority  of  competitors  that  responded  to the market investigation replied that  producers  of  mozzarella  could  not  start  producing mascarpone  without  incurring   in  significant   costs  and   in  a  short  period of time. (68)

(55)    Moreover, the majority of the respondents to the market investigation indicated that suppliers active in mascarpone could not start producing and selling ricotta without incurring  in  significant   costs and swiftly. (69)

(56)    Fourth, with regard to the country of  origin  of  non-PDO  Italian-type  cheese  products (including country of origin of the milk), as  indicated  in  paragraph  (41) above,  the   majority  of  responsive   customers   do  not  impose   any  specifications  as regard the origin of the milk of non-PDO Italian-type cheese products, including mascarpone. (70)

Conclusion

(57)    In light of the  results  of  the  market  investigation  and  for the  purpose  of  this decision, the Commission considers that mascarpone constitutes a separate product markets  from  other  Italian-type   fresh cheeses.

(D)     Feta

(58)    Feta is a fresh Greek cheese made  from ewe  and  goat  milk  in the mainland  Greece and its  department  of Lesbos bearing  a PDO label.

(59)    First, the majority of  customers expressing views  in  the  market  investigation considered that Feta is a distinct product from other fresh cheeses and Feta fulfils different  needs. (71)

(60)    However, several customers indicated that there are  alternatives  to  Feta  for  certain uses such as fresh salads. A Belgian customer indicated that “Many alternative products can be substituted for Feta, especially for salad uses”; (72) and French customers pointed out “Feta and mozzarella can be 2 alternatives in many consumption occasions for example in a composition of salad […]” (73) and “Feta is mainly used for salads. It is substitutable with other cheeses”. (74)

(61)    Moreover, the majority of competitors that responded to the market investigation indicated that customers would switch to other cheeses if the prices of Feta were to increase. (75)

(62)    Second, with regard to Feta carrying PDO labels, the majority of the customers that responded to the market investigation indicated  that  PDO  Feta  and  non-PDO products  were not  alternatives   in  terms  of price  and product characteristics. (76)

(63)    However, the majority of responsive customers and competitors submitted that end-customers would switch from PDO  Feta  to  non-PDO  products  if  the  price  of the  PDO Feta were to increase; (77)

Conclusion

(64)    In light of the  results  of  the  market  investigation  and  for the  purpose  of  this decision, the precise market definition can be left open as  the  Transaction  does  not raise serious doubts as to its  compatibility  with  the  internal  market  under any plausible   product  market definition.

(E)     Gorgonzola

(65)    Gorgonzola is a soft blue cheese carrying a PDO label. The production of PDO Gorgonzola  follows  the  rules  established  by  the  consortium.  Both  Lactalis   and Nuova Castelli are producers and members of the Consorzio per la Tutela  del  Formaggio   Gorgonzola  PDO.

(66)    First, the vast majority of customers responding to the market  investigation  have submitted  that  Gorgonzola  is  not  substitutable  or  only  partially  substitutable   with other type of blue cheeses in terms  of  price  and  product  characteristics (78) A  customer explained that “In some way, we could consider other “blue cheese” as “Roquefort”, “Bleu” or “stilton” as substitutes. But, they are stronger than Gorgonzola and can’t fit to all consumers. Gorgonzola is quite unique in terms of taste and texture”. (79)

(67)    Second, the majority of competitors that responded to the  market  investigation submitted  that  customers would  switch  to other  blue  cheeses  (in   particular roquefort) if the price of Gorgonzola would increase. (80) However, the majority of responsive customers indicated that, if prices of Gorgonzola were to increase, end- consumers  would  not  switch  to other  blue cheeses. (81)

(68)    Third, with regard to Gorgonzola  carrying  a  PDO  label,  the  majority  of  the  customers that responded to the market investigation indicated that  PDO  and  non-PDO Gorgonzola were not alternatives in terms of price and product characteristics. (82)

(69)    However, the  majority  of  competitors responsive to  the  market  investigation submitted that end-customers  would  switch  from  PDO  to  non-PDO  Gorgonzola  if  the price of PDO Gorgonzola were to increase;  (83) while the majority of responsive customers indicated that if prices of PDO Gorgonzola increased by 5-10% end-consumers   will   not switch  to non-PDO Gorgonzola. (84)

Conclusion

(70)    In light of the  results  of  the  market  investigation  and  for the  purpose  of  this decision, the precise market definition can be left open as  the  Transaction  does  not raise serious doubts as to its  compatibility  with  the  internal  market  under any plausible   product  market definition.

(F)     Italian-type   hard cheese

(71)    Both  Parties  sell  different   Italian-type   hard   cheeses,  with  and   without  PDO  label, i.e. Parmigiano Reggiano PDO, Grana Padano  PDO,  Pecorino  PDO,  non-PDO Grana  Padano-type and Parmigiano-type,  as well  as other hard   cheeses.

(72)    The production of Parmigiano Reggiano PDO  and  Grana  Padano  PDO  is  organised by a relevant consortia. Consortia, while not producing or selling the cheese itself, attributes the  production  quotas  and  defines  the  rules  that  consortia  members  have  to  observe  in  order  to  use  the  PDO  label  and.  These  rules  typically  relate  to the origin of the milk used (e.g. determined by a specific geographic area), production methods and the packaging. (85) Nuova Castelli is a member of the Consorzio del Formaggio  Parmigiano  Reggiano  and   Consorzio   Tutela   Grana   Padano.   Lactalis does not  produce Parmigiano   Reggiano   PDO and Grana  Padano PDO. (86)

(73)    First, the Commission’s market investigation found that the consumption habits of customers may be different across Member  States,  with  the  large  majority  of customers in  most   countries   considering   Parmigiano   Reggiano   and  Grana  Padano to be substitutable or at least  partially  substitutable  as  Italian-type  hard  cheese  for their main intended uses. (87) For example,  a  customer explained  regarding  the  alternatives for Parmigiano Reggiano:  “there  is  pecorino,  grana  padano  with similar characteristics and a lower price” (88), or as another customer stated: “Substitutable only by Grana Padano or [I]talian Hard Cheese”. (89) Furthermore, some customers considered  that, for example  Parmigiano  Reggiano  can  be substituted also with other hard cheeses: “could switch to non Italian  type  hard cheese or Grano Padano”, (90) or as another customer submitted: “Grana  Padano could be an alternative. Similarly as other hard cheeses for certain users who grate the cheese […]”. (91)

(74)    Second, the majority of customers and  competitors  expressing  their  views  indicated that if prices of Parmigiano Reggiano or Grana Padano were to  increase,  end- consumers would switch to other cheeses. (92)  The  majority  of competitors  expressing their views indicated that in case of price variation of Grana Padano or Parmigiano Reggiano customers will substitute one with the other. (93) According to the market investigation,  while  the  substitutability  was  particularly   strong   between  Grana Padano and Parmigiano Reggiano, it was not limited to  these  Italian-type  hard cheeses. (94)

(75)    Third, with regard to  substitutability  between  Parmigiano  Reggiano  and  Grana Padano carrying PDO labels,  the  majority  of  customers that  responded  to  the market investigation indicated that  PDO  and  non-PDO  Parmigiano  Reggiano  and Grana Padano were not alternatives  in  terms  of  price  and  product  characteristics (95) and end-customers would not switch from  PDO  to  non-PDO  Parmigiano  Reggiano  and Grana  Padano if  the  price  of the  PDO products  were to increase. (96)

(76)    However, the large majority of competitors expressing their views in the market investigation considered that, in case of a price increase of a PDO-type, the end- customers would switch to the non-PDO equivalent. (97) Moreover, when asked about alternatives for Grana Padano,  for  example,  some  customers  indicated  that  it  would  be substitutable: “With non PDO hard-cheese” (98),  or,  as  another  customer  explained, if the prices for Grana Padano were to increase: “Some customers could switch to similar cheeses non PDO, with characteristics close to Grana Padano”. (99)

Conclusion

(77)    In light of, the results of this market investigation, the information  provided  by  the  Parties and for the purpose of  this  decision,  the  Commission  considers  that  the relevant market is  broader  than  a  singular variety  of  an  Italian-type  hard  cheese.  For the purpose of this Decision, the Commission will carry out the assessment  in  relation  to the  plausible   market  for  Italian-hard cheeses.

4.3.2.   Possible segmentation of the supply of private label and branded cheese

(78)    Both Parties supply branded and private label Italian-type cheeses  to  retailers. However, for the product  markets  considered,  most of  Lactalis’  sales  are  in  branded products, while Nuova Castelli  focuses mainly  on  the  supply  of  private  label products.

4.3.2.1.   Commission’s  precedents

(79)    In previous  decisions,  the  Commission  considered  the  distinction  between  branded and private label products, and in some cases it came to  the  conclusion  that  they  belong  to the  same, albeit  differentiated   market. (100)

4.3.2.2.   Notifying  Party’s  view

(80)    The Notifying Party submits that private  label  products  and  branded  products compete head to head when they  are  sold  to  the  end  consumers;  however,  when they are sold to retailers, it is necessary to  distinguish  the  supply  of  private  label  cheese  from  the supply  of branded cheese. (101)

(81)    The Notifying Party argues that private label and branded products are procured separately  and  differently  by  retailers. (102)  Moreover,  the  role  played by  suppliers and retailers in these procedures is different. (103) The  Notifying  Party  explains  that  retailers procure private label products through separate tender procedures  and  they have  full  control  over  product characteristics (e.g.  origin  of   milk,   quality, packaging), as well as volumes, sales and marketing. (104) In contrast,  retailers  and suppliers negotiate the supply of branded products bilaterally, in over the counter negotiations. These negotiations are done on the  basis  of  product  characteristics  already  determined   by the supplier. (105)

4.3.2.3.   Commission’s  assessment

(82)    First, the Commission notes that the results of  the  market  investigation  suggest  that  large majority of customers and competitors consider that branded and private label Italian-type cheeses compete. (106) However, branded products can command  a significant  price  difference  even  for products  of  very  similar   characteristics. (107)   As one customer  explained: “In terms of  texture, taste and smell,  the private labels  and branded labels are equivalent; the price of branded is generally higher.” (108) Given that the suppliers of branded products usually also supply private  label  products, the price difference would apply even for  products  manufactured  by  the  same company.

(83)    From a demand side perspective, in the perception of consumers, brand  for  fresh  cheese products is an important and recognised element. The majority of customers expressing their views in the market investigation listed proprietary brands, such as Galbani (Lactalis), Zeta,  Casa  Azzurra  (Granarolo)  as  the  strongest  brand  for different  Italian-type  cheeses. (109)  Only  in  few  instances  a  private   label   was mentioned as the strongest brand. For example, a French customer mentioned that retailer’s  private  label  is  the  strongest  brand  for ricotta and  Italian-type   hard cheeses,  or few  Italian  customers  mentioned   Italian-type   hard cheeses. (110)

(84)    Furthermore, the majority of customers expressing their  views  in  the  market investigation also considered that at least one of the  Parties’  has  a  “must have brand”. (111) For example, a customer explained: “Galbani is a must for cow milk mozzarella […]. It is also very important for buffalo milk mozzarella, ricotta and mascarpone”; (112) or  as  another  customer submitted:  “Galbani  Mozzarella (Lactalis) is the market leader in Brands and should be listed in every full-line food retailer”. (113) The internal documents of the  Notifying  Party  also  refer  to  Galbani  as the “Italians’ most loved cheese brand” and the “strongest brand in Italian Cheese markets”. (114)

(85)    Second,  while  customer recognition  driven  by  a  brand  identifies   a   specific producers  and  is  associated  with  specific   qualitative   expectation,  which  are  driven by brand  investment,  advertising,  packaging and  indications;  the  private  label  products typically carry a retailer brand  and  are  identified as  a  ‘less costly’  alternative   which  may be in  a somewhat  lower  price segment. (115)

(86)    Third, the private  label  side of  the  market  is  also differentiated,  with  ‘entry’ products, or white label, carrying an alternative brand denomination and simpler packaging than retailer brands, possibly  of  lower  qualitative  specifications  and  an  even lower  price. (116)

(87)    Fourth, the procurement of branded and private label  products  is  different.  The  majority of  customers expressing views  suggested  that  they  have  separate  procedures  for  sourcing  branded  and private  label products. (117)

(88)    Branded cheese products  are  procured  through  bilateral negotiations.  Branded cheese products are less substitutable and typically have to feature on  shelves, particularly as regards the most recognised brands such as those held by Lactalis. (118) Private label cheese products are  usually  procured  through  tendering  processes  that are organised with concrete specifications. (119) Given that a supplier does not need  to invest in brand development and  marketing,  there  are  lower barriers  to  entry. Similarly,  given  the  regular  competitive  tendering  processes   based   primarily   on price  as a selection  criteria,   switching  barriers  for retailers   are likely   also lower. (120)

(89)    Fifth,  despite  such  differentiation  in  terms  of  pricing,  brand  and   characteristics,  there is evidence that such a differentiated offer may be a 'continuum'  of  options  available   to the  customer  and  for which  there  would  be a chain  of substitution. (121)

(90)    Sixth,  in  this  context,  the   different   procurement  mechanisms   may  not  be  sufficient to sustain a  finding  that  pricing  dynamics  would  significantly  differ  across  the  different products. Thus, even if, according to precedent, a separate market for procurement of private label products to be supplied under retailer brands may be considered, anti-competitive effects on such  market,  by  affecting  the  constraint  exerted by  private  label  products  in  on-shelf  competition,  may  eventually  also  lead to higher overall prices on the spectrum of products available including  branded products.

(91)    Seventh, consistent  with  this,  the  Parties’  internal  documents  show  that  they  track the market shares for both branded and private  label products  as  competing  in  the same market. (122)  In  addition,  the  Notifying   Party’s  internal  document  produced  in the regular course of  business  reads  for  mascarpone  market  “Galbani  competes with minor brand and PL that are more aggressive in terms of price and distribution” (123). A further example regarding the SWOT (124) analysis for the ricotta  market also shows that private  label  products  exert  direct  competitive  constraint  on the branded products: Lactalis presents continuously growing  private  label  as  a ‘threat’,  while   Galbani  - a leader  brand – as a ‘strength’. (125)

(92)    Eighth, the Notifying Party explained that it considers private  label  when  making strategic pricing and marketing decisions in order to avoid losing market  shares  to  private  label  products. (126)  Accordingly,  if  Lactalis  takes  into  account  the  prices  of the competing products, it would indicate that private  label  exert  a  competitive constraint   on the  supply  of branded products, too.

(93)    Furthermore, the Notifying Party’s internal documents suggest that, as  regards  specifically the Italian-type cheeses, the share of private label supplies has been increasing over the last years  and  represents  in  many  geographic  markets  an  important part of the overall market. (127) The Commission notes that the market data submitted by the Notifying Party also indicate that for some Italian-type  cheeses  in  certain countries, the increasing share of private label is achieved  at  the  cost  of  branded products supplies. (128) This in turn may indicate that retailers gain a stronger negotiation position vis- à -vis branded label suppliers, which have to  compete  for smaller available shelf space and  the  risk  that  it  may  further  shrink  because  of retailers’  ability  to  increase volumes  in  private  label  segment.  As  the   Notifying  Party   submits,   the   retailers   decide   on  the   amount   of  shelf   space  that   they will allocate to branded products and on the amount of shelf space they will allocate  to private  label products. (129)

(94)    Ninth, the Commission  also  observes  that  manufacturers  of branded  products,  such  as Italian suppliers Casa Azzurra, Lactalis and Nuova Castelli, as well as German suppliers Zott and Goldsteig, also feature on the Notifying Party’s list  as  the  main private label suppliers. (130) The Commission does not have  evidence, which  would indicate  that  manufacturers  of   Italian-type   cheese   would   exclusively   produce private  label  products. Accordingly,  as   manufacturing   facilities   for   producing private and branded label products are the same,  the  suppliers  would  be  able  to  switch  from  supplying  branded  to private  label  products  and the other  way around.

(95)    Tenth, the Notifying Party also explained  that  for producers  focusing  on  branded cheese supply the private label orders are important “in terms of valuing idle capacities” (131). Accordingly, a shift in the output volumes of private label of the manufacturer focusing on branded products supplies would have an effect on  the  capacity utilisation and  ultimately  also  on  the  cost  structure  and  competitiveness  of  its  supplies   of branded products.

(96)    In light of the findings and the results of the market investigation, the Commission considers that while private label  products  exert  a  constraint  on  branded  products, this may not be sufficient to exclude that branded products primarily compete in a  different market. In any event, for the  purposes  of  the  present  case,  the  exact  market definition can be  left  open as  the  Transaction  does  not  raise  serious  doubts as  to its  compatibility  with  the  internal  market  under any   plausible   market definition.

4.4. Production  and sale of fresh dairy   products

4.4.1.  Commission’s precedents

(97)    In previous decisions, the Commission held that, within the supply of basic  dairy  products, a distinction ought to be made between fresh  dairy  products  and  long-life dairy products. (132)

(98)    With regard to fresh dairy products, these  are  generally  produced  from  dairy products such as milk and cream, in which,  among  others,  eggs,  thickening  agents  (such as starch), sugar, flavours  and/or  fruits are  added. (133)  Within fresh dairy products, the Commission  has  distinguished  different  products  categories,  namely fresh  milk,  fresh  buttermilk  or yoghurt. (134)

(99)    Concerning fresh dairy desserts, they represent a variety of ready-made sweet dairy desserts including custard, portion  packs  such  as  mousse, (rice)  puddings, profiteroles,   tiramisu  and  porridges.  The   Commission  considered  that  fresh   custardin gable top, porridge and portion pack dairy desserts constitute separate relevant product markets. (135)

4.4.2. Notifying Party’s view

(100)    The Notifying Party submits that, in many cases, consumers consider all  types  of  desserts as substitutable. However, in the absence of any  significant  overlapping activities, the Notifying  Party  takes  the  view  that  the  precise  market  definition  may  be left  open. (136)

4.4.3. Commission’s assessment

(101)    According to the  information  provided  by  the  Parties,   Lactalis   manufactures different  types  of  fresh dairy  desserts  under its  brand   Galbani,   including  tiramisu; (137) and that (ii)  Nuova  Castelli  sells  in  limited  volumes  one  type  of  fresh dairy  desserts,  namely  tiramisu. (138)

(102)    As the Transaction does not raise serious doubts as  to  its  compatibility  with  the  internal market with respect to the production and sale of  fresh  dairy  desserts  (including tiramisu)   under  any   plausible   product  market   definition,  the Commission  considers  that  the  precise  market  definition  may  be left open.

4.5. Production  and sale of butter

4.5.1. Commission’s precedents

(103)    In previous decisions, the Commission held that separate product markets  exist  for  butter sold in bulk and butter sold in packets. (139) Moreover, bulk butter constitutes a separate product market, different from the market for bulk yellow fats including  margarine   and liquid   vegetable   oils. (140)

(104)    The Commission also came to the  conclusion  that  dairy  bulk  butter  can  also be divided into (i) basic butter (with a 82% fat  content);  (ii)  butter  oil  (or  non-  fractionated butter oil, i.e., with  a  99,8% fat  content)  and  (iii)  fractionated  butter  oil (or fractionated   butter). (141)

(105)    In addition, the Commission held  that  vegetable  fats  (namely,  margarine)  are  not  in  the packet butter  market. (142)  The  Commission,  however,  left  open  the  question whether plain packet butter and packet butter with additives constituted separate markets. (143)

4.5.2. Notifying Party’s view

(106)    The Notifying Party submits that the Parties are active  on  the  market  for the  production and sale of butter and  that  the  Parties’  overlap is  very  limited. (144)  Therefore, the Notifying Party takes the view  that  that  the  precise  market  definition may  be left open. (145)

4.5.3. Commission’s assessment

(107)    As the Transaction does not raise serious doubts as  to  its  compatibility  with  the  internal market with respect  to  the  market  for the  production  and  sale of  butter under any  plausible  definition, the  precise  product  market  definition  may  be  left open.

4.6. Geographic  market definition

4.6.1. Procurement of milk

4.6.1.1.   Commission’s  precedents

(108)    In previous cases, (146) the Commission left open whether the geographic scope of the markets for the procurement of  raw  milk could  be  national  or  narrower,  i.e.,  regional or even local. As regards the  Italian  market,  the  Commission  left  open whether the relevant market for the procurement of raw milk should be defined as narrower than national because raw milk is perishable in nature  and  the  maximum  storage  duration  prior  to further   processing  is limited. (147)

4.6.1.2.   Notifying  Party’s  view

(109)    The Notifying Party  submits  that  the  markets  for  the  procurement  of  milk are  at least national, if not wider, comprising clusters of countries. (148) The Notifying Party  submits that this is  particularly  the  case  for  Italy  due  to  the  fact that (i)  procurement of  milk may  take  place  throughout  Italy;  (ii)  milk can  be  easily  transported  from one region  to  another;  (iii)  imports  of  milk are  frequent  due  to  the  insufficient  level of  Italian  domestic  milk production;  and  (iv)  pricing  conditions  are   broadly consistent   throughout  Italy. (149)

4.6.1.3.   Commission’s  assessment

(110)    The Parties’ activities only overlap in the procurement of raw cow’s milk in certain  regions of Italy. Therefore, the competitive assessment  of  the  Transaction  will  be carried  out  at a national  level  and to a certain  extent  in  narrower  areas in Italy.

(111)    However, for the purpose of this  decision,  the  precise  geographic  market  definition  can be left open the Transaction does not raise serious  doubts as to  its  compatibility with  the  internal  market  under  any plausible   market definition.

4.6.2. Supply of Italian-type cheese and Feta to retailers

4.6.2.1.   Commission’s  precedents

(112)    In previous cases, the Commission concluded that  the  markets  for the  supply  of cheese  are national  in scope. (150)

4.6.2.2.   Notifying  Party’s  view

(113)    In line with  the  Commission’s  precedents,  the  Notifying  Party  argues that  the markets for the  supply of  branded cheeses  are  national  due  to consumer preferences, price differences  between  Member  States,  and  to  the  importance  of local  brands  and strong  national trademarks. (151)

(114)    However, the Notifying Party argues that the market for the supply of private-label cheese to retailers is wider than national because (i) customers are  the  retailers, therefore making  consumer  preferences  and  brands  less relevant;  (ii)  retailers organise  European-wide  calls  for tenders  and  some European  retailers  have regrouped their  activities  in  buying alliances;  (iii)  suppliers  from  various  Member States have the ability to supply cheeses across Europe; (iv) imports  and exports of cheese are significant in the EU; (v) the labelling products does  not  constraint  competition between suppliers from various Member States, and (vi) prices for private-label  cheeses  are homogenous   across various  Member States. (152)

4.6.2.3.   Commission’s  assessment

(115)    The market investigation confirms that the markets for  the  supply  of  cheese  are national.

(116)    First, the large majority of customers that responded to  the  market  investigation  indicated that they negotiate contracts for the supply of branded  and  private  label  cheese  at national level.- (153)

(117)    Second, the vast majority of responsive customers indicated  that  the  relevant  geographic market for the  supply  of  mozzarella,  ricotta,  mascarpone,  hard  Italian- type  cheeses  (Grana  Padano,  Parmigiano  Reggiano)  and  Feta  is  national  in scope. (154)

(118)    Third, seven customers that responded to the market investigation indicated that customers’ demand of Italian-type cheeses is substantially the same across  EEA countries, while six  customers indicated  that  it  was  different. (155) However,  the  majority of responsive competitors indicated that  end-customers’  demand for Italian-type  cheeses and  Feta  are  substantially  different  in  terms  of   brands, customer  preferences  and  product characteristics   across EU countries. (156)

(119)    Fourth, the majority of customers and competitors that responded to the market investigation indicated that prices of Italian-type  cheeses  are  substantially  different across different   EEA  countries.  (157)

(120)    For the purpose of this decision, the competitive assessment of  the  supply of Italian-type  cheese  and  Feta  to  retailers  will  be  carried  out  at  the  narrowest   level,

i.e. a national level; however, the  precise  geographic  market  definition  can  be  left open as the Transaction  does  not  raise  serious  doubts  as  to  its  compatibility  with the  internal  market  under  any plausible   geographic   market definition.

4.6.3. Production and sale of fresh dairy products

4.6.3.1.   Commission’s  precedents

(121)    In previous cases, the  Commission  considered  that  the  relevant  market  for  fresh dairy  desserts  would  be national  but  the exact  market  definition  was left open. (158)

(122)    Regarding portion pack dairy desserts, the Commission considered that it  could  be wider  than  national  in scope. (159)

4.6.3.2.   Notifying  Party’s  view

(123)    The Notifying Party takes the  view  that, in  the  absence  of  any  significant  overlapping  activities,   the  precise  geographic   definition  may  be left open. (160)

4.6.3.3.   Commission’s  assessment

(124)    For the purpose of  this  decision,  the  competitive  assessment  of the  Transaction  will be carried out at a national level; however,  the  precise  geographic  market  definition can be left open as the Transaction does not raise serious doubts  as  to  its compatibility with  the  internal  market  under any  plausible  geographic  market definition.

4.6.4. Production and sale of butter

4.6.4.1.   Commission’s  precedents

(125)    In  previous  cases,  the  Commission  considered  the  geographic  market  for bulk butter,  fractionated   butter  oil  and non-fractionated  butter  oil  to be EEA-wide. (161)

(126)    With regard to packet butter,  the  Commission  considered  in  previous  decisions  that the relevant  geographic  market  was  wider  than  national  and  left  open  whether  it was EEA-wide but deemed to be at least regional (i.e.  including  more than  one Member State). (162)

4.6.4.2.   Notifying  Party’s  view

(127)    The Notifying Party considers that the markets for butter is EEA-wide, or at least  regional.    However,    in    the    absence    of   significant    overlapping   activities    of the Parties on these markets, the Notifying Party submits that this question may be left open. (163)

4.6.4.3.   Commission’s  assessment

(128)    For the  purposes  of  this  decision,  the  competitive  assessment  of  the  Transaction will be carried out at the  narrowest  level possible,  i.e.  at a  national level.  However,  the precise geographic  market  definition  can  be  left  open  as  the  Transaction  does not raise serious doubts as to its compatibility with the internal market under  any  plausible   geographic   market definition.

5. COMPETITIVE ASSESSMENT

5.1. Legal framework

(129)    Article 2 of the Merger Regulation  requires the  Commission  to  examine whether notified  concentrations are  compatible  with  the  internal  market,   by   assessing whether  they  would  significantly   impede   effective   competition   in   the   internal market  or in  a substantial  part of it.

(130)    The Commission Guidelines on  the  assessment  of  horizontal  mergers  under the Merger  Regulation   (the   "Horizontal   Merger   Guidelines")   distinguish   two   main ways in which  mergers  between  actual  or  potential competitors on  the  same relevant market may significantly  impede  effective  competition,  namely  non- coordinated  effects  and coordinated   effects. (164)

(131)    Non-coordinated effects  may  significantly  impede  effective   competition   by  eliminating  the  competitive  constraint  imposed   by  one  merging  party  on  the  other, as a result of which the merged entity would have increased market power without resorting to coordinated behaviour. According to recital (25) of the preamble of the Merger  Regulation,  a  significant  impediment  to  effective   competition   can  result  from the anticompetitive effects of  a  concentration  even  if  the  merged  entity  would not have a  dominant  position on  the  market  concerned.  In  this  regard,  the  Horizontal Merger Guidelines consider not  only  the  direct  loss of  competition  between the merging firms, but also the reduction in competitive pressure on non-  merging  firms   in  the same  market  that  could  be brought  about  by the merger. (165)

(132)    The  Horizontal  Merger  Guidelines  list a  number   of  factors,  which  may  influence   the rise of substantial non-coordinated effects from  a  merger,  such  as:  the  large market shares of the merging firms; the fact that the  merging firms  are  close  competitors; the  limited  possibilities  for  customers to  switch  suppliers;  or  the  fact that the merger would eliminate an important competitive force. The  list  of  factors  applies equally  if  a  merger  would  create  or  strengthen  a  dominant  position,  or would otherwise significantly impede effective competition due  to  non-coordinated effects. Furthermore, not all of those factors need to be present to make significant non-coordinated   effects  likely   and the  list  itself  is  not an exhaustive list. (166)

5.2. Methodology for market shares data

5.2.1. The market shares submitted by the Notifying Party

(133)    According to the Horizontal Merger Guidelines and the Non-Horizontal Merger Guidelines,  market  shares  constitute  useful  first  indications  of  the  market  structure and of the  competitive   importance   of the market players.

(134)    The Notifying Party  submitted  market  shares  in  volume  and  value,  when  available,  for each plausible product  and  geographic  market.  The  market  shares  were  based  on the Parties’ actual sales of the  Italian-type  cheese  and  Feta-type cheese  products  as recorded internally  at the  wholesale  level.

(135)    The Notifying Party used retail data as a proxy for the total market size. Subject to availability, the market size for volume  market  shares  was  based  on the  Nielsen  or  IRI panel data providers, who record the total volumes of  cheese  sold to  end- consumers  at  retail level  nationally.   Similarly,   subject   to  availability,   the   market size for value market shares was based on the total  value  recorded  by  the panels. (167) (168) For the plausible product markets where panel data for 2018 was unavailable, the Notifying Party used 2016 or 2017 panel data. (169) For the plausible product markets where panel data was not available to the  Notifying  Party for  any years, the Notifying Party used market size estimates based on (i) Nuova Castelli’s estimates recorded in  internal  documents (170);  (ii)  Eurostat  trade  data (171);  (iii)  per capita  consumption  approach (172).  Finally,  for the  plausible  markets  where   no estimates   for   the   market   size   were  available,   the   Notifying   Party  confirmed that their combined market shares would be below 20% for these markets due to low  sales. (173)

(136)    The Notifying Party argued that panels tend to underestimate  the  real  size  of  the market, as they do not cover all outlets  active  the  retail sector  and  do  not  capture small sales, and proposed to increase  the  market  size  by  […]  for  branded  cheese, and branded and private cheese when accounted together (174). This methodology was applied for the market size estimates derived from the panel data. Moreover,  the  Notifying Party stated that panels tend to underestimate  the  market  size  for  private  label products to a greater extent that for branded  products.  This  is  because private label cheese products are  also used  internally by  retailers  to  sell  in  their  on- premises restaurants or are used as ingredient for the sale of  deli  foods,  such  as lasagne,  and  such  sales  would  not  be  captured  by  panels. (175)  Therefore, the Notifying Party proposed to amend the  market  size  for  the  plausible  markets  of private label products by multiplying the total volume of private label products sold downstream by […] for mozzarella and by […] for mascarpone,  ricotta and Gorgonzola due to the fact that  such  cheeses  are more  widely used  as ingredients  in deli  dishes  than  mozzarella. (176)  The  Commission  noted   that  although  multipliers   for the market size  of  private  label  supply were  introduced, the  Notifying  Party’s market shares are still likely overstated, as in some  instances  they  are  larger  than  100% and are not in line with the market share estimates of other  active  players  provided by the Notifying Party or the results from the market investigation. (177) The Commission notes that  because  different  multipliers  were  used  to  adjust  market  sizes, the sum of estimated market sizes  separately  for  branded  (multiplied  by  […]) and private label (multiplied by […]or […])  does  not  fully  match  the  estimated  size for  branded and private  label  combined  (multiplied   by […]). (178)

(137)    The Commission examined the methodology and the market shares provided by the Notifying Party, and used the market shares in volume as  a  primary  tool  for  determining the competitive strength of the Parties. (179) Moreover, in cases of  differentiated products, sales in  value  and  their  associated  market  share  also  reflect  the relative position and strength of each supplier.  This  notion  does  not  apply  to private   label  products,  which  are  not  differentiated.   However,  for  branded    goods, the Commission used market shares in value to supplement the examination of  the  Parties’  competitive   position  in  addition  to market  shares  in volume.

5.2.2. Market share analysis developed by the Commission

(138)    The Commission has conducted a  further  quantitative  analysis  to  verify  the accurateness of the  volume  market  shares  provided  by the  Notifying  Party.  Subject  to availability, the Commission  used  the  panel  sales  data  as  the  basis  for  analysing the   market   structure   and   other  competitors   in   the   market   for   the  calendar  year 2018. (180) Typically, panel data records the  sales  of  various  brands  and  the  total volume and value data per type of product in a  given  year.  Although  the  sales  of private label are  recorded  under one  entry  and  do  not  specify  the  wholesale supplier, the sales information on branded goods allows further examination on the Parties’ market  share  and  evaluation  of  their  competitors  for  the  plausible  markets  of branded goods.

(139)    The Commission undertook this  approach  as  the  Notifying  Party  also uses  panel data in order to track their own and competitors’ developments in the market in the ordinary course of  business. (181)  The  panel  data  was  provided  by  Lactalis,  which noted that they request granular per-brand data only  concerning  their  largest competitors. As a  result,  in  some instances  the  sales  of  Nuova  Castelli  were  included in the total sales captured by the panels, but were not specified under a stand-alone brand due to its  insignificant  sales  share.  To  address  this,  the  Commission identified such instances  where  the  Parties  had  internal  sales  recorded, but no entry for these sales appeared in the panel. Based on the Parties’ internal  wholesale sales data (182), the Commission  introduced sales  of  branded  products  in  such instances, scaled down by […]. (183) The Commission did not make any other adjustments to total market size and the sales  that  were  actually  recorded  by  the panels  and allocated  to various  competitors,   including  Lactalis   and Nuova  Castelli.

(140)    The Commission reconstructed market shares based on the  Parties’  sales  and  total  sales  recorded by the  panel at retail  level  for  branded products.

(141)    Moreover, the Commission also used the panel data to  determine  the  Parties’  sales share in the combined markets of branded and  private  label goods.  Given that panel  data does not recognize  the  supplier  at  wholesale  level  for  private  label  products,  the Commission introduced the  actual  sales  data  of  the  Parties,  scaled  down  by […], and reported the remaining share of private label  for other  unspecified  competitors. This approach follows the same  methodology  as  the  one  introduced  by the Notifying Party  for the  market  shares  calculations.  In  some instances,  the  adjusted Parties’ sales of private label goods were  still  larger  than  the  total  private label  sales  recorded  by  the  panels. This  confirms  the   Notifying  Party’s  allegation that  panels  tend to  underestimate   the total  market  size  for  private label.

(142)    By following this approach, the Commission used third-party  data  to  evaluate  the Parties share in the Italian-type cheese and Feta-type cheese products with the adjustments   discussed  in  the  paragraphs above.

(143)    The Commission finds that  the  market  shares  as  recomputed  (Adjusted  market shares) are in principle a more  reliable  metric  of  overall  market  interaction  as  they rely on all available data, including third party data, adopt a  credible approach concerning underlying assumptions, provide results which are consistent  with  the estimated total size of the market  and  do  not result  in shares higher  than 100%, and  are corroborated by qualitative   evidence  gathered  in  the  market investigation.

(144)    For  the  above principle,  in  principle,  and  subject  to data  availability, the Commission will use the  Adjusted  market  shares  based  on  panels  as  the  primary and most  reliable  source  of  quantitative  information  to  assess  the  Parties’  position  for the plausible markets of branded goods as well as branded and private label combined. When data  is  not  available,  reference  will  be  made  to  shares  as submitted   by the  Notifying Party.

5.3. Horizontal   non-coordinated  effects

(145)    Based on the market share data submitted  by  the  Parties,  the  concentration  would  give rise to putative horizontally affected markets  in  Italy  (Section  5.4),  France (Section  5.5),  Belgium  (Section   5.13),   Denmark   (Section   5.10),   Finland  (Section 5.12), Germany (Section 5.7), the Netherlands (Section 5.14),  Poland (Section 5.8), Portugal (Section 5.11), Spain (Section 5.15), Sweden (Section 5.9),  and the  United  Kingdom  (Section  5.6).

5.4. Italy

(146)    Based on the market share data submitted by the Parties and  in  light  of  the methodology used by  the  Commission  (see  Section  5.2),  the  Transaction  gives  rise to the  following  horizontally  affected markets  in  Italy:   cow   milk   mozzarella  (Section 5.4.1); buffalo milk mozzarella (Section 5.4.2); ricotta (Section 5.4.4) and Gorgonzola   (Section 5.4.3);.

5.4.1. Cow milk mozzarella

(147)    Both Lactalis and Nuova Castelli supply branded  and  private  label  cow  milk mozzarella to retailers in Italy.  As  outlined  by  the  market  shares  (see  Table  1  below), the main overlap between the Parties  is  in  the  supply  of private  label  cow  milk  mozzarella.

(A) Branded cow milk mozzarella

(148)    For branded products, based on the Adjusted market shares, the Parties have a  combined share of [40-50]% in the supply of  branded  cow  milk mozzarella  to retailers   in Italy  in  2018, with  a limited   increment  of [0-5]%. (184)

(149)    First, as  regards  branded  cow  milk mozzarella,  the  Transaction results  in  an  affected market only because of Lactalis’ large market presence  with  branded products,    with    strong    and    widely    recognised    brands, in particular Galbani, Vallelata,   and Invernizzi. (185)

(150)    Second, this is consistent with the fact that, in Italy, Nuova  Castelli does  not  enjoy strong  brand  presence  in  cow  milk mozzarella,  but  focuses primarily on  private label supplies of this product to retailers. Thus, the Transaction will bring a limited increment  to Lactalis’   market  share  of [0-5]%.

(151)    Third, several other strong competitors  of  Lactalis  are  active  in  the  branded  space, for instance Granarolo, Sabelli and Brimi. Overall, the Parties’ competitors  in  the  branded segment have a strong presence with important  brands,  which  account  for  over [50-60]% of this  market  segment  in  Italy.

(152)    Fourth, the Adjusted market  shares  point  at  a  fragmented  set of  suppliers  of branded cow milk mozzarella in Italy, which are as large as or  larger  than  Nuova Castelli.

(153)    Moreover, the results of the market investigation reveal that a number of credible competitors can  and  do  offer  volumes  of  branded  cow  milk mozzarella  to  retailers in Italy and compete in the negotiations organised by retailers. Data collected from  retailers show that a majority of  them  source  from  a  relatively  wide  range  of suppliers   of   branded  cow   milk   mozzarella.   In   particular,   the   data   shows   that in 2018 most retailers have sourced from one or more suppliers other than  the  Parties. (186)

(154)    Therefore, the branded segment of cow milk mozzarella  will  continue  having a multitude  of  credible suppliers   with   established   commercial  relations   with  retailers in Italy.

(155)    The Commission  has  also  considered  in  its  assessment  the  arguments  presented  in  the below section as regards the overall market, and  in  particular  concerning  the absence of significant barriers to entry and expansion, the  availability of  other  suppliers, the ability to switch suppliers and the impact  of the  Transaction  that  also  apply  to the  assessment  of branded  cow milk  mozzarella.

(156)    In conclusion, based  on  the  information  available  to  the  Commission  and  provided  by Parties, the Commission finds  that  the  Transaction does not  raise  serious  doubts  as to its  compatibility  with  the  internal  market  with  regard  to  the  plausible  market  of branded  cow milk   mozzarella   in Italy.

(B) Private label cow milk mozzarella

(157)    For private label, the Parties have a  combined  share  in  the  supply  of private  label  cow milk mozzarella to retailers in  Italy  of  [20-30]%,  with  an  increment  of [10-20]%.

(158)    First, in  the  private  label segment,  based  on the  Notifying  Party’s  estimates,  there  is a  significant  number  of  alternative  private  label  suppliers   in   Italy:   Caseificio Pugliese: [10-20]%; Granarolo: [5-10]%; Centro Latte Bressanone: [5-10]%; Trevisanalat: [5-10]%; Caseificio  Villa:  [0-5]%;  Caseificio  Morozzese:  [0-5]%; Palazzo SNC [0-5]%; Sabelli: [0-5]%;  Sanguedolce: [0-5]%;  Ecolat: [0-5]%; Alimenta SpA: [0-5]% and Bustaffa: [0-5]%. (187) These are viable competitors that currently offer volumes of cow milk mozzarella  to  retailers  and  will  continue  to compete with the merged entity in  Italy  in  tenders  organised  by  retailers.  This  is  in  line with the data collected from retailers  that  show  that  a  majority  of them  source from a relatively wide range of  suppliers  of  cow  milk mozzarella.  In  particular,  the data shows that a majority of  retailers  have  sourced  from  two  or  more  suppliers  other  than the  Parties  in 2018. (188)

(159)    The Commission has also considered in its assessment of this plausible market the arguments presented in the below section as regards the overall  market,  and  in  particular concerning the absence of significant barriers to entry and expansion, the availability of other suppliers, the ability to switch suppliers and the impact of the Transaction  that  also apply  to the  assessment  of private  label  cow milk  mozzarella.

(160)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard  to the  plausible   market of private  label cow milk   mozzarella   in  Italy.

(C) Overall market for cow milk mozzarella in Italy

(161)    On the overall market for the supply of branded and  private  label  cow  milk  mozzarella to retailers in Italy,  based  on  the  Commission’s  Adjusted  market  shares, the Parties have a combined market share in 2018 of [40-50]%, with a moderate increment  of [5-10]%.

(162)    First, the  Transaction  will  bring  a  moderate  increment  to  Lactalis’  market  shares. This increment mainly relates to the supply of  products  to  be  resold  under  private  label  by retailers.

(163)    Second, the Commission observes the overall market for  branded  and  private  label cow milk mozzarella in  Italy  appears  to  be  extremely  fragmented  (see  Table  1 below) with several active players both in the branded and private label and the production  evenly   distributed   throughout   the Italian  territory. (190)

(164)    Third, as outlined  in  Section  4.3.2,  the  market  for the  supply of  cow  milk mozzarella to retailers  is  a  differentiated  market  across  sales  channels,  where suppliers can compete in branded  and  in  private  label  cheese.  Although  the  presence of suppliers in the same sales channel could be indicative of closeness of competition between them, the pricing  of  private  label  products  has  some  effect  on the  pricing  ability  in  the  branded segment   of the market.

(165)    Beside the considerations concerning the structure and shares of  the  cow  milk mozzarella market, the Commission considers that the Transaction  does  not  raise  serious  doubts  for  the following reasons.

(166)    First, the Commission finds, based on the results of  the  market  investigation,  that barriers  to entry  are not high   for suppliers   of cow milk   mozzarella   in Italy.

(167)    Second, as regards barriers to expansion,  the  results  of  the  market  investigation suggest that a number of suppliers active in  Italy  could  increase  supply  in  the  short term without   incurring  in  significant  cost.

(168)    When market  conditions  are  such  that  competitors  have  sufficient  capacity  and  find  it  profitable  to  expand  output  sufficiently,  the   Commission  is   unlikely   to  find   that the merger would  significantly  impede  effective  competition. (191) Conversely, when market conditions are such that the competitors of the merged entity are unlikely to increase their  supply significantly  should  prices  increase,  the   merged   entity   may have an incentive to reduce output below the combined  pre-merger  levels  thereby  raising  market prices. (192)

(169)    The Notifying Party argues that at the  EEA  level  the  production  capacity  for  cow  milk mozzarella  is  almost  double  than  the  total  EEA  supply. (193)  The   Commission  was not able to verify the estimates  of  the  Parties  in  its  market  investigation. However, the evidence in the file indicates that  several  competitors,  including  non-  Italian manufacturers with production assets in the Italian territory, could profitably  expand  output  with  their  current  production  assets.

(170)    Some  competitors have  referred  to  their  recent  and  on-going  investments   in capacity expansion. (194) Several market respondents indicated that the cost and time required to build additional lines to expand production  are  not  significant. (195)  In particular the majority of competitors that  expressed  a  view  in  the  market  investigation indicated that they are able to quickly expand production in Italy of Italian-type cheese and, thus, can decide  to  enter  another  EEA  market  for  Italian-  type  cheeses in  a relatively  short timeframe. (196)

(171)    Moreover, the  potential expansion of  production  capacity  is   not   merely hypothetical but corroborated by specific examples relating to the Italian market. In particular,  the  Commission  found  that  a  number  of  the  Parties’  competitors  in Italy have expanded their production of cow milk mozzarella in the last  3  years  without having  to incur  into  any significant  capital   investments. (197)

(172)    Furthermore, the  Commission  has  assessed  whether  credible and   imminent  expansion of  the  existing  production  of  cow  milk mozzarella  from  the   Parties’  rivals  would  be  likely to  occur.  The  market  investigation  has  revealed that  more than one of the Parties’ competitors in Italy is planning to expand significantly and structurally  their  production  capability  of  cow  milk mozzarella  over  the   course  of the  next  3  years  and  have  already  mobilised  funds  to  this  effect. (198)  The Commission, therefore, finds that there  are  no  significant  barriers  to  entry  or expansion in  cow  milk mozzarella  in  Italy  and  that  alternative  suppliers   seem  to have  sufficient  capacity  and  incentives  to  expand   the   production  volume,   should  the  merged  entity  increase  prices  in Italy.

(173)    Third, as regards logistics and distribution,  competitors and  customers in  Italy  confirmed in  the  market  investigation  that  distribution  on  the  Italian  territory  is already fragmented and organised in a way that  it  is  possible to  distribute  fresh products on  the  Italian  territory  without  incurring in  significant  costs,  even  for smaller  manufacturers.

(174)    Fourth, with regard to the use of milk from Italy in the production of cow  milk  mozzarella, this is regarded by many Italian customers as an important element of consumer preference, and it is the object  of  specific  on-label  indications.  In  this  regard, however, the  competitive  constraint  exerted  by  Nuova  Castelli is  low because the  company  sources  most of  the  milk used  to  manufacture  mozzarella from  outside  of Italy. (199)

(175)    Fifth, the Italian market is also characterised by low barriers  to  switching  for  the products mainly supplied by Nuova Castelli. While the branded  position  of Lactalis  seem to command  customer loyalty,  the  vast  majority  of  the  retailers  who responded to the Commission’s requests for information stated that it is  possible  to switch to different suppliers of mozzarella  for the  type  of  cow  milk mozzarella products supplied by Nuova Castelli. (200) Most of the retailers noted that they have switched to  a  different  supplier  of  mozzarella  over  the  past  3  years. (201)  This  suggests that  customer switching  costs  for  the  supply  of  cow  milk mozzarella  in  Italy are not significant. This also indicates  that  there  is  a  dynamic  and  fragmented range  of viable  suppliers   of cow milk   mozzarella   in Italy.

(176)    Sixth, as regards the impact of the Transaction, the majority of retailers in Italy that expressed a view during the market investigation held that there will be no change post-Transaction with respect to  the  competitive  conditions  in  relation  to  the  supply of cow-milk mozzarella. (202) Moreover, the majority  of  responsive retailers  in  Italy believe that the Transaction will have no impact on the  market  or  on  their  companies. (203)

(177)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to  its  compatibility  with  the  internal  market  on  the  plausible  markets  for  private label cow  milk mozzarella  in  Italy  as  well  as  branded  cow  milk  market  mozzarella in Italy.

(178)    Based on the above considerations and in the light of the results of the market investigation,  the  Commission  considers  that the  concentration   does   not   raise serious doubts as to its compatibility with the internal market as regards the  overall market for  cow milk   mozzarella   in Italy.

5.4.2. Buffalo milk mozzarella

(179)    Lactalis  supplies  only  small   volumes   of   branded  buffalo   milk   mozzarella   to retailers in Italy, whereas Nuova Castelli supplies both branded and private label mozzarella.

(180)    The  Parties’  activities  in  buffalo milk mozzarella  in  Italy   result   in   an   affected market  when  considering  the  supply  of  branded  buffalo milk mozzarella  to  retailers in Italy,  as well  as the  overall  market for  buffalo   milk   mozzarella   in Italy.

(A) Branded buffalo milk mozzarella.

(181)    For branded products, based on the Commission’s market  share  analysis,  the combined  Adjusted  market  shares  for branded buffalo milk mozzarella   are [20-30]%, with a moderate  increment  of  [5-10]%  due  to  Lactalis’  moderate branded presence (204) As pointed out by the moderate increment in the market  for  branded buffalo milk mozzarella,  in   Italy   Lactalis   trades   limited   volumes   of branded  buffalo milk mozzarella  produced  by  third  parties  through  its   brand  Galbani (Vallelata). Conversely, in Italy Nuova Castelli enjoys brand  presence  in  relation to buffalo milk mozzarella  through  its  subsidiary  Mandara.  Additionally, Nuova  Castelli  supplies  private  label  buffalo   milk   mozzarella   to retailers.

(182)    Second, the results of the market investigation point toward a fragmented  market.  Market participants named a broad number  of  potential  supply  options  for  buffalo milk mozzarella,  in  particular  Fattorie  Garofalo, Caseificio  Tre  Stelle,  Spinosa,  Cilento,     Pettinicchio,     Francia     Latticini,     Caseificio     Cirigliana,     Diano  Casearia, Caseificio   Principe  and Podere dei Leoni. (205)

(183)    This extremely  diversified  picture  is  evidenced  by  the  fact  that  the  combined  share of the Parties’  competitors in  branded  buffalo milk mozzarella  exceeds  [50-60]%, with  Francia’s  and  Spinosa’s  shares  each  approximately   equivalent   to  the increment   triggered   by the Transaction.

(184)    The Commission has also considered in its assessment of this plausible market the arguments presented in the below section as regards the overall  market,  and  in  particular concerning the absence of significant barriers to entry and expansion, the availability of other suppliers, the ability to switch suppliers and the impact of the Transaction  that  also apply  to the  assessment  of branded  buffalo   milk  mozzarella.

(185)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard to the  plausible  market of branded buffalo   milk   mozzarella  in    Italy.

(B) Overall market for buffalo milk mozzarella in Italy

(186)    Based on the Commission’s Adjusted market shares, the Parties’ combined market  shares  are [20-30]%, with  a moderate  increment  of [0-5]%.

(187)    First, the Transaction will bring a moderate  increment  to  Nuova  Castelli’  market  shares,  due to Lactalis  moderate  branded  presence.

(188)    Second, the presence of  the  Parties’  competitors  is  strong  and  a  significant  number of producers are active in the market for  buffalo milk mozzarella  with  access  to  retailers in Italy, for instance Francia and Spinosa’s shares  each  approximately equivalent   to the  increment   triggered  by the  Transaction  (see Table  2 above).

(189)    The above finding,  based  on  the  Parties’  and  their  competitors’  shares  on  the overall market for buffalo milk mozzarella,  was  corroborated  in  the  market investigation,  which  pointed at  multiple  supplier  options.  As  an   illustration,   an Italian retailer indicated that “the market for buffalo milk mozzarella is extremely fragmented.” (207)  This  was  confirmed  by  the  Parties’  competitors,  a  number  of which  qualified the  market  for   buffalo  milk  mozzarella   as   particularly  fragmented. (208)

(190)    As indicated in paragraph (182) above,  market  participants  named  a  broad  number  of  potential supply options for buffalo milk mozzarella,  in  particular  Fattorie Garofalo, Caseificio Tre Stelle, Spinosa,  Cilento,  Pettinicchio,  Francia Latticini, Caseificio Cirigliana, Diano  Casearia,  Caseificio  Principe,  Podere  dei  Leoni. (209)  In view of the Parties’ activities, these competitors are closer to Nuova Castelli as manufacturers of their own product, as opposed to Lactalis which does not have manufacturing  activities   for  buffalo   milk   mozzarella   and only trades.

(191)    In both branded and  private  label,  the  existence  of  a  number  of  credible  competitors offering volumes of buffalo milk mozzarella to retailers  in  Italy  and competing in the negotiations organised  by  retailers  is  not  only  confirmed  by  qualitative  descriptions of  market  interaction  by  such   customers,   but   also  confirmed  by  actual  sourcing  information.   Data  collected   from  retailers  shows  that a majority of them source from a  relatively  wide  range  of suppliers  of buffalo  cow milk mozzarella. In particular, the data  shows  that  most  retailers  have  sourced  from one or more  suppliers   other  than  the Parties  in 2018. (210)

(192)    Third, as outlined in Section 4.3.2,  the  market  for the  supply of  buffalo milk mozzarella to retailers  is  a  differentiated  market  across  sales  channels,  where suppliers can compete in branded  and  in  private  label  cheese.  Although  the  presence of suppliers in the same sales channel will be indicative of closeness of competition between  them,  the  pricing  of  private  label  products  will  have  some effect  on the  pricing  ability  in  the branded  side  of the market.

(193)    Beside the considerations concerning the structure and shares of the buffalo milk mozzarella market, the Commission considers that the Transaction  does  not  raise  serious  doubts  for  the following reasons.

(194)    First, the  Commission  finds that  retailers  do  not  face   significant   barriers   to switching across suppliers  in  Italy.  The  vast  majority  of the  retailers  who  responded to the Commission’s requests for information stated that it is possible to switch to  different suppliers of mozzarella. (211) More  importantly,  most  of  these  retailers  noted  that they have switched to a  different  supplier  of  any  type  of  mozzarella  over  the  past 3 years. (212)  This  suggests  that  customer  switching  costs  for  private  label supply of  buffalo milk mozzarella  in  Italy  are  not  significant.  This  also  indicates  that  there are little barriers to switching  across  the  fragmented  range  of  viable  suppliers  of buffalo   milk   mozzarella   in Italy.

(195)    Second, as regards barriers to entry, the  market  investigation  suggested  that  a  potential barrier could  be  the  more limited  availability of  buffalo milk,  which  is scarcer than cow  milk.  However,  and  mainly  in  view  of  the  range  of  players already active on the market, this is not regarded as particularly problematic by the Parties’ competitors as well  as  retailers  responding  on the  issue  of barriers  to  entry or expansion  to the market  of buffalo   milk   mozzarella   in  Italy. (213)

(196)    Third, and consistent with the above, Italian retailers responding to the market investigation generally did not express  concerns  as  to  the  impact  of the  Transaction  on the market for buffalo milk mozzarella in Italy. A majority  of  customers that expressed  a  view  during  the  market  investigation   states  that,   post-Transaction, there will be no change with respect to the competitive conditions  in  relation  to  the supply  of buffalo   milk   mozzarella. (214)

(197)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal  market  on  the  plausible  market  for  branded buffalo   milk   mozzarella   in Italy.

(198)    In conclusion, in light of the above and based on the information available to the Commission  and  provided  by  Parties,  the  Commission  considers  that   the Transaction does not raise serious doubts in the overall market for buffalo milk mozzarella   in Italy.

5.4.3. Gorgonzola

(199)    Lactalis supplies both branded and private label Gorgonzola  to  retailers  in  Italy, whereas Nuova Castelli supplies branded Gorgonzola and very limited volumes  of  private  label  Gorgonzola.

(A) Branded gorgonzola in Italy

(200)    In the supply of branded Gorgonzola to  retailers  in  Italy,  the  Parties  have  a combined  Adjusted  market  share  of [40-50]%, with  a limited   increment  of [0-5]%.

(201)    First, as regards branded Gorgonzola, the Transaction  results  in  an  affected  market only because of Lactalis’ large market  presence  with  branded  products,  with  strong and widely recognised brands of Gorgonzola, and in particular Galbani and Gim Invernizzi. (215)

(202)    Second, this is consistent with the fact that, in Italy, Nuova  Castelli does  not  enjoy strong presence in Gorgonzola,  in  which  Nuova  Castelli  is  a  much  smaller  player than Igor or Lactalis. (216) Thus, the  Transaction  will  bring  a  limited  increment  to  Lactalis’   market share  of [0-5]%.

(203)    Third, several  other  strong  competitors of  Lactalis  are  active  in  branded  Gorgonzola, including Igor, the  market  leader,  as  well  as  Mauri,  Biraghi  and  Bassi, all of them enjoying  market  shares  in  the  overall  Gorgonzola  market  similar  to  that of Nuova Castelli (see Table 3 below). Overall,  the  Parties’  competitors  in  the  branded segment have a strong presence with important  brands,  which  account  for  over [30-40]% of the  overall  Gorgonzola  market in  Italy  (see Table  3 below).

(204)    Consistent with these Adjusted market shares, which point at a fragmented set of suppliers that are as large as or, even larger than Nuova Castelli  in  the  branded  segment, the market investigation supports the finding that a number of credible competitors can  and  do  offer  volumes  of  branded  Gorgonzola  to  retailers  in  Italy and compete in the negotiations organised by retailers. Data  collected  from  retailers show that a majority of them source from a relatively wide range of suppliers  of  branded Gorgonzola. In particular, the data shows that  most  retailers  have  sourced  from  one or more suppliers   other  than  the Parties  in 2018. (217)

(205)    The Commission has also considered in its assessment of this plausible market the arguments presented in the below section as regards the overall  market,  and  in  particular concerning the availability of other suppliers and the  impact  of  the  Transaction  that  also apply  to the  assessment  of branded Gorgonzola.

(206)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard  to the  plausible   market of branded  Gorgonzola  in Italy.

(B)  Private label Gorgonzola in Italy

(207)    First, Nuova  Castelli  had   very   limited   sales   of  private   label  Gorgonzola   in  Italy in 2018.

(208)    Second, in light of the above, the Transaction will bring a very limited increment  to Lactalis’ market share  ([0-5]%  of the  overall  market,  see  Table  3 below)  in relation to this segment in Italy, therefore it is unlikely to affect the  existing  structure  of the  market.

(209)    Third, the Commission observes that the private label segment of the market for Gorgonzola in Italy is rather fragmented and the  production  distributed  among  a  number  of producers  throughout  the PDO territory.

(210)    The Commission has also considered in its assessment of this plausible market the arguments presented in the below section as regards the overall  market,  and  in  particular concerning the availability of other suppliers and the  impact  of  the  Transaction  that  also apply  to the  assessment  of private  label Gorgonzola.

(211)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard  to the  plausible   market of private  label Gorgonzola  in  Italy.

(C) Overall market for gorgonzola in Italy

(212)    Based on the Commission’s methodology, Adjusted market shares  for  the  overall market for  Gorgonzola  in Italy  are as  follows.

(213)    First, as explained in Section 4.3.1.3(E),  the  market  for Gorgonzola  is  strictly regulated by  the  Consorzio  Gorgonzola  PDO,  on  the  overall  market  for  branded and private label, the Commission observes that it is rather fragmented and  the  production   is   distributed   throughout    the    PDO    territory,    which    includes    the 10 provinces  of Lombardy  and 5 provinces   in  Piedmont. (219)

(214)    Moreover, Italy enjoys the presence of a number of alternative suppliers of  both branded and private label Gorgonzola, namely – among others –  Igor:  [30-40]%;  Emilio   Mauri:  [0-5]%; Biraghi:  [0-5]%; Bassi SpA: [0-5]% (see Table  3 above).

(215)    Second, as outlined in Section 4.3.2, the market for the supply of  Gorgonzola  to  retailers is  a  differentiated  market  across  sales  channels,  where suppliers  can compete in branded  and  in  private  label  cheese.  Although  the  presence  of suppliers in the same sales channel will  be  indicative  of  closeness  of  competition  between  them, the pricing of  private  label  products  will  have  some  effect  on  the  pricing ability  in  the  branded side  of the market.

(216)    Beside the considerations concerning the structure and shares  of  the  Gorgonzola  market, the  Commission  considers  that  the  Transaction does  not  raise serious  doubts  for the  following  reasons.

(217)    First, the  Commission  finds,  based  on  the  market  investigation,  that  barriers   to entry  and expansion  are not high  for  suppliers  of Gorgonzola  in   Italy.

(218)    When market  conditions  are  such  that  competitors  have  sufficient  capacity  and  find  it  profitable  to  expand  output  sufficiently,  the   Commission  is   unlikely   to  find   that the merger would significantly impede  effective  competition. (220)  Conversely,  when market conditions are such that the competitors of the merged entity are unlikely to increase their  supply significantly  should  prices  increase,  the   merged   entity   may have an incentive to reduce output below the combined  pre-merger  levels  thereby  raising  market prices. (221)

(a)   From  the  demand side,  the  market  investigation  suggested   that  the   majority of retailers respondents do not believe that there are barriers  to  entry  or expansion  in  terms  of cost and time. (222)

(b)   From the supply side, the  majority  of  market  respondents  indicated  that  the cost and time required to enter or expand production in Italy are  not significant. (223)

(219)    The  Commission  therefore considers  that  alternative   suppliers   have   sufficient capacity and incentives to expand the production volume, should the merged entity increase  prices  in Italy.

(220)    Second, as regards logistics and distributions, competitors and customers in Italy confirmed  in  the  market  investigation  that  distribution  in  the  Italian  territory  is already fragmented and organised in a way that  it  is  possible to  distribute  fresh products on the Italian territory  without  incurring on  significant  costs,  even  for  smaller  manufacturers.

(221)    Third, the Italian market is also characterised by low barriers to switching for  the  products mainly supplied by Lactali through  Gim  Invernizzi.  While  the  branded position of Lactalis  seems  to  command  customer loyalty,  the  majority  of  the  retailers who  responded  to  the  Commission’s  requests  for  information  stated  that  it  is possible to switch to different suppliers of Gorgonzola. This indicates there  is  a  dynamic   and fragmented   range  of viable  suppliers   of Gorgonzola   in Italy.

(222)    Fourth, with regard to the impact of the Transaction, a third party stated that the Transaction “will not have a negative impact on […] the overall market of Gorgonzola in Italy.” (224)  Furthermore, the  same third  party  described  Nuova  Castelli  as a company  “rather small when it comes to Gorgonzola.” (225)

(223)    Moreover, the majority  of  responsive  retailers  in  Italy  held  the  view  that  there  will  be  no  change  post-Transaction  with  respect  to  the  competitive  conditions   in relation to the supply of Gorgonzola. (226) Moreover,  the  majority  of  responsive  retailers in Italy believe  that  the  Transaction  will  have  no  impact  on  the  market  or  on their  companies. (227)

(224)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market on the plausible market for branded Gorgonzola   as well  as private  label Gorgonzola.

(225)    Based on the above considerations and in light of the results of  the  market  investigation,  the  Commission  considers  that the  concentration   does   not   raise serious doubts as to its compatibility with the internal market as regards the  overall market for  Gorgonzola  in  Italy.

5.4.4. Ricotta

(226)    Lactalis and Nuova Castelli are active in the market for ricotta in Italy. Both Parties manufacture   and sell  branded  and private  label ricotta.

(A) Branded ricotta in Italy

(227)    For branded ricotta, the combined Adjusted market  share  of the  Parties  in  2018  in Italy was [60-70]% (in volume), with  a  limited  increment  of  [0-5]%  in  view  of Nuova  Castelli’s   limited   brand presence. (228)

(228)    First, Nuova Castelli had limited sales of branded ricotta in Italy in 2018. The Transaction will bring a limited increment to Lactalis’ market share of  [0-5]%. Moreover,  Nuova  Castelli  does not  enjoy strong  brand presence.

(229)    Second, after the Transaction, the merged entity will continue to face significant competitive pressure from the strongest branded competitor to Lactalis, Granarolo. According to the data provided by the Parties  and  based  on  the  Commission’s analysis (see Section 5.2 above), in 2018 Granarolo represented  a  stronger  competitive   constraint   than  Nuova  Castelli  with  regard   to  branded  ricotta  in  Italy. Granarolo’s recorded sales of branded ricotta were five times higher than Nuova  Castelli’s sales and accounted for [5-10]% of the overall ricotta  market in Italy (see Table  4 below).

(230)    Third,  the  merged  entity  will  also continue  to  face   significant   competitive   constraints  from  three  other  branded  suppliers  (Caseificio  Elda,  Campo  Dei  Fiori and Caseificio Sabelli) which in 2018 had individual sales of  branded  ricotta  comparable to those of Nuova  Castelli.  Moreover,  several  additional smaller  suppliers of  branded  ricotta will  remain  in  the  Italian  market  post-Transaction.  These suppliers  accounted  for  [10-20]%  of  the   overall  market  for  ricotta  in  Italy in  2018 (see Table  4 below).

(231)    Fourth, with regard to the ability of customers to switch  suppliers  of  ricotta,  the majority of customers that  responded  to  the  market  investigation  considered  they could not quickly switch to an alternative supplier of branded  ricotta with  a comparable range and sufficient quantities; (229) however, the majority of responsive competitors and customers that expressed a view indicated  that  it  was  possible  and even easy to switch  suppliers   of ricotta. (230)

(232)    Finally,  the  Commission  has  also considered  in  its  assessment  of  this  plausible market the arguments presented in the  below  section  as  regards  the  overall  market, and in particular concerning the  absence  of  significant  barriers  to  entry  and expansion, the availability of other suppliers and  the  impact  of  the  Transaction  that  also  apply to the assessment  of branded  ricotta.

(233)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard  to the  plausible   market of branded  ricotta  in Italy.

(B)  Private label ricotta in Italy

(234)    First, both Parties have moderate  sales  of private  label  ricotta  in  Italy  in  2018  and the  combined  market  share  remains  modest,  slightly  above [20-30]%.   The combined market share of the Parties in  2018  in  Italy  was  [20-30]%  (in  volume), with  a moderate  increment  of [5-10]%.

(235)    Second, after the Transaction, the merged entity will continue to face  significant competitive pressure from several suppliers of private label ricotta that  in  2018 accounted   for   more   than   […]   tons   of   private    label    ricotta    sold    in    Italy (i.e. [30-40]% of the overall market, see  Table  4  below).  These suppliers  will  continue  to exercise competitive  pressure  on  the  merged  entity  after   the Transaction.

(236)    Third, with regard to the  ability  of  customers  to  switch  suppliers  of ricotta,  half  of  the responsive customers that expressed a view  indicated  that  they  could  quickly  switch to  an  alternative  supplier  of  private  label  ricotta  with  a  comparable  range  and  sufficient  quantities. (231)

(237)    Finally,  the  Commission  has  also considered  in  its  assessment  of  this  plausible market the arguments presented in the  below  section  as  regards  the  overall  market, and    in    particular    concerning    the   absence  of   significant    barriers   to  entry  and expansion, the availability of other suppliers and  the  impact  of  the  Transaction  that  also  apply to the assessment  of private  label  ricotta.

(238)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard  to the  plausible   market of private  label ricotta  in  Italy.

(C) Overall market for ricotta in Italy

(239)    Based on the Commission’s methodology, Adjusted market shares  for  the  overall market for  ricotta  in Italy  are as  follows.

(240)    The Transaction results in an affected market because of  Lactalis’  large  market presence with branded products, with strong and widely recognised brands, such as Galbani. Nuova  Castelli has  a  more limited  presence  in  the  overall  market  for ricotta  in  Italy,  bringing  a moderate  increment  of [0-5]%.

(241)    Beside the  considerations concerning  the  shares  of  the  market  for  ricotta  in  Italy, the Commission considers that the Transaction does not raise serious doubts for the following  reasons.

(242)    First, after the Transaction, the merged entity will  continue  to  face  significant  competitive pressure from Granarolo as well as from more than three  branded  and private  label  competitors,  which  accounted  for  [50-60]%  of  the  overall  market  for ricotta in Italy (see Table 4 above).  These competitors are  likely to  continue exercising competitive pressure on the merged entity comparable to the  pressure exercised  by Nuova  Castelli  on Lactalis  pre-Transaction.

(243)    Second, with regard to the  ability  of customers  to  switch  suppliers  of ricotta,  while  the majority of customers that  responded  to  the  market  investigation  had  not switched suppliers of branded or private label ricotta in the last three years, (233)  the majority of responsive competitors and  customers  that  expressed  a  view  indicated that  it  was possible  and even  easy to switch  suppliers   of ricotta. (234)

(244)    Third, concerning barriers to entry and expansion, different from other fresh cheese products discussed above for which access to milk has been assessed as a potential barrier to entry,  ricotta  is  produced  from  a  by-product  of other  cheese  production. In  particular,  as  explained  by  the  Notifying  Party,  ricotta is   manufactured   by heating whey to 80° C.  The  market  investigation  confirmed  that  ricotta is  by-  product of whey, (235) which is a liquid derived from the production of soft  and  fresh cheese (e.g.  mozzarella) (236). The  Parties  use their  leftovers  of  whey  to  produce ricotta as well as milk powder. Nuova Castelli also sells part  of  its  whey  to  third parties.

(245)    Moreover, the  market  investigation  also indicated  that  (i)  there  has  been  at  least  one  entrant  in  the  market  for  ricotta  in  Italy  in  the  last  5  years,  Valcolatte; (237)     and

(ii) two Italian competitors indicated that they could substantially  increase their production  of  ricotta without  incurring   in   significant   additional   costs. (238)   In  addition, the majority of customers that  responded  to  the  market  investigation indicated that there were not significant barriers to entry  or  expansion  for  ricotta  in terms  of costs and time.   (239)

(246)    Fourth, the majority of the Italian competitors and customers that responded to  the market investigation  indicated  that  the  Transaction  will  not  have  impact  on  prices  for the  supply  of ricotta  in  their  countries. (240)  Moreover,  a  competitor  indicated  that  it  expected  prices  for  ricotta  to decrease in Italy. (241)

(247)    Fifth, the Commission  found  that  the  Transaction  does  not  raise  serious  doubts  as  to its compatibility with the internal market  on  the  plausible  markets  for  branded  ricotta  in  Italy  as well  as private  label  ricotta  in Italy.

(248)    In conclusion, in light of the above and based on the information available to the Commission  and  provided  by  Parties,  the  Commission  considers  that   the Transaction  does not raise  serious  doubts  in  the  overall  market  for ricotta  in Italy.

5.4.5. Milk procurement

(249)    Lactalis only procures cow  milk in  Italy,  and  does  not  procure  buffalo nor  sheep  milk there. Conversely  Nuova  Castelli  procures  cow  milk,  buffalo milk and  sheep milk   in Italy. (242)

(250)    For conventional cow milk,  the  market  share  of the  Parties  in 2018 for  procurement of raw and pasteurised cow milk in Italy was below  [10-20]%,  with  a  limited increment   of approximately  [0-5]%. (243)

a) For conventional cow raw milk, the market share of the Parties in 2018 for procurement of conventional raw cow milk in Italy was [10-20]%, with a limited increment of [0-5]%. (244)

(b) For conventional pasteurised cow milk, the market share of the Parties in 2018 for procurement of conventional cow pasteurised milk in Italy was [10-20]%, with a negligible increment of [0-5]%. (245)

(251)     For completeness, the Commission notes that the market share of the Parties in 2018 for procurement of conventional cow raw milk in  Italy  was  [30-40]%  in  Lazio,  with  a  negligible  increment  of  less than  [0-5]%;  and   [50-60]%  in  Sicily, with  a moderate  increment   of [0-5]%. (246)

(252)    With regard to Sicily, the milk collected by Lactalis in Sicily is only for fresh milk consumption, and not  for  cheese  production.  Nuova  Castelli  is  not  present  as  such in Sicily but procures indirectly  milk that  is  collected  in  Sicily  for  its  production  plants located in […] and in […]. Limiting  the  market  for  the  procurement  of milk  from farmers (excluding traded milk) would  entail  that  there  is  no  overlap  in  Sicily. The overlap  exists  only  when  assessing  a  market  that  includes  milk from  Sicily  that is  traded. In any event,  the increment   is  minimal. (247)

(253)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard  to the  market  of milk   procurement  in Italy.

5.5. France

(254)    Based on the market share data submitted by the Parties and  in  light  of  the methodology used (see Section 6.3), the Transaction gives rise to the following horizontally affected markets  in  France:  Cow  milk mozzarella  (Section  5.5.1);  buffalo milk mozzarella  (Section  5.5.2);  ricotta (Section   5.5.3);   mascarpone (Section 5.5.4); Gorgonzola (Section 5.5.5); Feta (Section 5.5.6); Italian-type hard cheese  (Section  5.5.7) and other  affected  markets  (Section 5.5.8).

5.5.1. Cow milk mozzarella

(255)    Lactalis and Nuova Castelli are active in  the  market  for  cow  milk mozzarella  in  France.  Both Parties  sell  branded  and private  label  cow milk  mozzarella.

(256)    In view of the fact that in  France  both  Parties  sell  branded  and  private  label  cow milk mozzarella, the Commission  also  considered  the  impact  of  the  Transaction  on  the market structure for the supply  of  branded  products,  and  for  the  supply  of  private  label  products,  as well  as the impact  on the  overall market.

(A) Branded cow milk mozzarella

(257)    Focusing on branded products only the combined Adjusted market share would be [40-50]% (Lactalis: [40-50]%; Nuova Castelli: [0-5]%). (248) Although the Parties’ combined shares in the branded segment  are high,  these  are largely due  to  the  very  high share of Lactalis, which is active on the market through a brand  which  is  consistently referred to as  the  strongest,  and  in  many  cases  as  a  'must  have'  brand by retailers.  However,  the  increment  from Nuova Castelli  is   modest.

(258)    The  market  investigation  confirmed  the  submission  by  the  Notifying  Party  that Nuova Castelli specializes  in  the  supply of  private  labels,  its  brands  are  little  known, whereas Lactalis specializes in the supply of  branded  products  with  well- known brands. In  particular,  multiple  retailers  confirmed  that  the  Nuova  Castelli brand enjoys little to none brand awareness: ‘On the French  market  the  Castelli brand enjoys little to none brand awarness'’ (249), ‘Galbani enjoys a far superior brand awareness that Castelli which is not know in France as a brand.’; (250) and  ‘The Nuova Castelli brand (Alival) has little relevance for the consumer compared to Lactalis brand (Santa Lucia and Vallelata)’. This is reflected in  the  small  increment   of [0-5]% brought  by Nuova Castelli.

(259)    As regards closeness of competition, the market investigation points at the  fact  that Nuova Castelli and Lactalis  are  not  closely  competing  in  the  branded  product market. There are bigger competitors such as Granarolo which is  active  both with a strong brand as further developed in  paragraph (260) and in private  label.  There are  also alternative similar sized players as Nuova Castelli  such  as  Ambrosi,  which, similarly, do not have a  strong  brand  but  are  present  with  limited  sales  in  the  branded cow milk mozzarella  segment.  On  the  specific  question of  closeness,  Nuova Castelli is not seen as  a  real  competitor to  Lactalis.  As  an  illustration, retailers indicated that Galbani and Nuova  Castelli are  not  close  competitors: ‘They  are not close competitors in our opinion. Castelli is rather in competition with Granarolo or Ambrosi.’ (251) confirming that the  competitive  pressure  exerted  on Lactalis   by Nuova Castelli  brand  is currently  very  limited.

(260)    The market investigation further confirmed  the  presence  of  stronger  brands  than Nuova Castelli as competing closer with  Lactalis.  In  particular,  there  are  better- known brands such as Casa Azzurra of Granarolo which is confirmed by market investigation.   When  asked  for  the   strongest  brands,  the   retailers   cited   most  often Galbani (Lactalis), followed by Casa Azzurra (Granarolo) and Ambrosi (Ambrosi), Nuova  Castelli  is never cited (252).

(261)    The Commission has  also  considered  in  its  assessment  that  the  arguments  presented in the below section as regards the overall market, and in particular concerning the absence of significant barriers to entry and expansion, the  availability of  other  suppliers, evidence of  switching  and  lack of  barriers  to  switching  with  respect  to  this  plausible  market also  apply  to the  assessment  of branded  cow milk   mozzarella.

(262)    In view of the above, the Commission  finds that  the  Transaction  does  not  raise  serious doubts as to its compatibility with the internal market  with  regard  to  the  branded  cow milk   mozzarella   in France.

(B) Private label cow milk mozzarella

(263)    Considering the private label procurement  segment  and  using  downstream  market  share at retail level as a proxy to estimate market shares  at  procurement  level  the Parties have [60-70]% combined share of supply  in  volume  (Lactalis:  [40-50]%; Nuova  Castelli: [20-30]%).

(264)    In France, more than half of the cow milk mozzarella market is private label ([50-60]%). (253) All biggest retailers in France  carry  their  own  private  label products (254). Most of them  also offer  different  qualities  ranging  from low-tier  (“premier   prix”)  to conventional,   organic  or high-end   private  label  mozzarella. (255)

(265)    For the private label procurement market, using downstream  market  share  at  retail  level as a proxy to estimate market  shares  at  procurement level,  the  increment  brought  by  Nuova  Castelli is  more significant,  with  Nuova  Castelli adding [20-30]% to Lactalis  [40-50]% market  share  considering  2018 figures.

(266)    The Commission has  also  considered  in  its  assessment  that  the  arguments  presented in the below section as regards the overall market, and in particular concerning the absence of significant barriers to entry and expansion, the  availability of  other  suppliers, and evidence of switching /  lack  of  barriers  to  switching  with  respect  to this plausible market also apply to  the  assessment  of  private  label  cow  milk mozzarella   in France.

(267)    In view of the above, the Commission  finds that  the  Transaction  does  not  raise  serious doubts as to its compatibility with the  internal  market  with  regard  to  the  private  label  cow milk   mozzarella   in France.

(C)Overall market for cow milk mozzarella in France

(268)    Both Lactalis and Nuova Castelli supply branded  and  private  label  cow  milk mozzarella in France. Lactalis is the largest supplier  of branded  and  of private  label  cow  milk mozzarella.  Nuova  Castelli  is  the   second  largest   private   label  supplier, and  has  significantly  lower volumes  in  branded  segment.  As  outlined  by  the Adjusted market shares, most of the overlap between  the  Parties  in  cow  milk mozzarella in France occurs in the private label market for the supply of cow milk mozzarella to retailers in France. Based on the market share data  submitted  by  the Parties   and   in   light   of  the   methodology   described   in  Section  5.2,  the  combined Adjusted  market  shares  in   branded  and   private   of  the   Parties   in   volume   terms in  2018 were: [50-60]% (Lactalis:  [40-50]%; Nuova Castelli:   [10-20]%).

(269)    Overall, during  the  market  investigation  a  majority  of  customers in  the  French market expressing their views expressed concerns about the possible impact of the Transaction on prices  for  Italian-type  cheeses,  and  in  particular  in  view  of the  loss  of a competitor   on the cow milk   mozzarella  market.

(270)    Beside the  considerations concerning  the  concentration   of   the   competitive landscape and shares of the market for cow milk mozzarella  in  France,  the  Commission considers that the Transaction does not raise serious doubts, as to its compatibility  with  the  internal  market  on  the  overall market  for cow   milk mozzarella   in  France, for  the reasons  highlighted  below.

(271)    First, as explained above, the Parties are  not  close  competitors on  the  branded segment as Lactalis  is  active  on  branded  cow  milk mozzarella  in  particular  through  its flagship and widely recognised brand  Galbani  in  France.  Conversely, Nuova Castelli does not enjoy strong brand presence in cow milk mozzarella, but focuses primarily  on private  label  supplies   of this  product  to retailers.

(272)    The only element  of  differentiation  on  which  the  companies  may  be  identified as close competitors in the private  label  market  in  France  by  some  retailers  concerns  the fact both companies  have  facilities  in  Italy  and  can respond  to  tenders for  'made in Italy' mozzarella. Out of all respondents  which  expressed  a  view  half  of them  do not consider  that  this  was an important   criteria  and  the other  half  does (257).

(273)    For example, a retailer submitted: ‘To have mozzarella "made in Italy"  is important  to compete on the premium market […] (258)’; another one explained ‘It is an Italian typical product for it to be made in  Italy is a clear advantage.’ (259)  On the  other  hand, this view is not shared by  a  number  of  retailers,  which  do  not  seem  to consider this criteria as critical: ‘The made in Italy  label is  not  important on cow  milk mozzarella’. (260)

(274)    However, the assessment of the tender behaviour show that a large majority  of the French retailers that replied to the  market  investigation  are  sourcing  both  made  in Italy  and non-made  in  Italy  cow milk   mozzarella (261).

(275)    The  Parties  also provided  evidence  that  even  when  a  tender  is  specifically  issued for made in Italy cow milk mozzarella, there  is  still  competition  and  price  pressure  from suppliers of cow milk mozzarella not produced in Italy.  As  an  example,  the  Parties  provided  evidence  that  even  tenders  issued  for   made   in  Italy  mozzarella may ultimately result in the selection of a German manufacturer for price considerations. (262)

(276)    This is consistent  with  the  overall data  on  import  trends  of  mozzarella.  On  a national basis  the  evolution  of  imports  of  mozzarella  in  various  Member  States shows that, in France,  the  share  of Italian  imports  fell  from 60  to  56  % from 2015 to  2018,  while  the  share  of  mozzarella  manufactured  in  Germany’s  gained  11 points  between 2016 and  2018. (263)

(277)    All these elements further suggest that  mozzarellas  from different  origins are substitutable  to some  extent  from  the  point  of view  of retailers  and end-consumers.

(278)    Second, the Commission's finding confirms that there  is  a  number  of  other  players with  manufacturing  facilities   in  Italy  capable  to supply  the French market.

(279)    Market investigation data shows that  at  least  4  Italian  based  companies  other  than the Parties actively supply retailers. The other Italian  based  companies  actively supplying  retailers   are described  by the Parties  as follows:

(a)    Granarolo is one  of  the  leading  groups  on  the  Italian  fresh  cheese  markets. It runs 14 plants in Italy and  7  abroad.  Active  both  in  branded  cow mozzarella through the Casa  Azzurra  brand  and  private  label.  Granarolo exports  cheese  in  35  European  countries  through  2  large  commercial  hubs  in  France  and in  the UK.

(b)    Ambrosi, exports part of its production to  France,  Germany,  USA  and Japan. It has  a distribution  company  in  France (ETS  Schöpfer  SAS);

(c)    Zanetti is active in the  supply  of  cow  milk mozzarella,  ricotta,  mascarpone and Gorgonzola, both in France and the UK. Zanetti works  with  Disgroup  which  is   an  external  service   provider  engaged   in  the   provision  of  logistics and delivery services active in France. Zanetti outsources at least part of its distribution  in  particular   in France;

(d)    Sabelli identifies itself as “one of the most important players in  the Mozzarella market”. (264) Its focus is mainly  on  export,  especially  to  the French market.  In 2016, it  acquired  Trevisanalat.

(280)    The market investigation  also points  to  a  number  of  other  alternative  suppliers. When asked for  available  viable  alternatives,  the  respondents  pointed  at  a  number  of  suppliers,   such   as  Alliance   Eurofood,   Zott,   Jager,   Bayernland,   Colla,  Rivaldi, Morsillo,   and Valcolatte. (265)

(281)    Moreover, the limited market power  of Lactalis  and  Nuova  Castelli  in  private  label can be illustrated by the fact  that  Nuova  Castelli  lost  important  private  label  cow  milk mozzarella  sales  volumes  with  retailers  while  Lactalis   captured  only  part  of these quantities. As seen in the graph below, in 2019 Nuova Castelli lost significant volumes of  private  label  cow  milk mozzarella  with  […],  […],  and  […]. (266)  As regards […], the graph shows that Lactalis’ volumes  to  […]  have  significantly increased and likely substituted the volumes previously supplied by  Nuova  Castelli.  Given that Lactalis did not increase their private label  sales  at  […]  and  […],  it  is  likely that these volumes were attributed to  other  suppliers.  However,  it  is  to  be  noted  that  a large  share of the volumes   lost  by Nuova Castelli  concerns  […]. (267)

Figure 2 – [Figure comparing the parties’ sales volumes in the first  nine  months  of 2019 compared  to their sales volumes in the first  nine  months  of 2018, by customer].

[…]

Source: […]

(282)    As explained by the Parties: “The parties’ market  share  decreased by […].” (268)  Most  importantly  this  provides  a  strong  indication  that  there  are   alternative suppliers.

(283)    This evolution underlines  that  French  retailers  can  find  alternative  suppliers  to produce  their  private  label  cow  milk mozzarella.  Since  January 2018,  there  has been a substitution away from Nuova Castelli which only partially shifted towards Lactalis, confirming that there are available alternatives  as  evidenced in  the  graph below.

Figure 3 – [Figure showing the evolution of the parties’ market shares on the market for the supply  of private label cow milk  mozzarella  in  France]

[…]

Source: […]

(284)    Third, the  competition  for the  supply  of  private  label  products  to  retailers  takes place  through  tenders,  which  are generally  organised  yearly.

(285)    Retailers   usually   issue   tender    for    different    types    of   cow    milk    mozzarella (e.g. mozzarella in brine 125  g,  mozzarella  in  brine  250g,  dry  mozzarella  400g, organic mozzarella) and indicate the volumes required for each of these categories.  Market investigation indicate that retailers issue multiple  tenders  depending on packaging, weight, specificities (e.g.,  first  price,  organic)  with  requested  volumes ranging from less than 25 tons to almost 1000 tons depending on the type  of  product. (269)

(286)    Based on the  information  provided  by retailers  on participants  in  tender  procedures,  it also regularly happens that private label tenders in France are  allocated  among  different  suppliers.

(287)    Suppliers answer calls for tenders, and the selection of suppliers is carried out on a reference by reference basis. A supplier might win a tender for a given format or packaging (e.g.  for mozzarella  in  brine  125g)  and  another  supplier  for another format  of  mozzarella.  Therefore, when participating  in  a  tender,   suppliers   offer  their  best price  for  each individual reference.

(288)    Fourth, according to Lactalis, ‘any competitor with sufficient production capacity must be regarded as a significant competitive constraint for the Parties on the French market since logistics and distribution cannot be considered as a barrier to entry or expansion’ (270).

(289)    Lactalis submitted, in particular, that  (i)  Granarolo and  Savencia  distribute  their products in  France using in-house/subsidiary  assets,  (ii)   Emi   and   Ambrosi distribute in France through their own joint venture  (Diprola,  France)  and  (iii)  eight  other  competitors  outsource  (at least)  their  transportation  services  in  France. (271)

(290)    In the course of  its  market  investigation,  the  Commission  assessed  whether distribution and logistics could be  considered  as  a  significant  barrier  to  entry  in France. While  a  number  of  suppliers  considered  distribution  and  logistics  as  a barrier to entry in France (272) or as a competitive  advantage  for companies who  own  their  own  distribution  platforms (273),  the  Commission  was  ultimately  able,   on  the basis of distribution patterns  of  many  existing  and  potential  suppliers,  to  establish  that there exists a sufficient number of suppliers with a viable  route  to  market  to distribute   their  products.

(291)    While  some market  participants mentioned  logistics  as  a  barrier  to  entry  analysing the current structure of  the  supply  market,  a  significant  amount  of suppliers  do  rely on outsourcing for their  distribution  and  logistics.  In  France,  the  majority  of  suppliers  that  responded  to  the  market  investigation  fully  or  partially  outsourced   their distribution process,  while  only  2  respondents  did  their  distribution  fully  in- house. (274)

(292)    Lactalis identified nine providers of transportation services (including refrigerated transportation) and nine providers of  warehousing  services for fresh food  that  operated in  France and provided  these  services  on a non-exclusive   basis (275).

(293)    Finally,  the  majority  of  suppliers   use   wholesale   agreements,   “groupage”   and/or joint  distribution  agreements  as  part  of  their  distribution  strategy   in   several countries   including  France. (276)

(294)    From the retailer’s perspective, according to the Notifying Party, four retailers have developed  so-called  “consolidation  warehouses”  to  minimise   the   number   of delivery   points   for   the   suppliers.   In   France,  according   to  the   Notifying   Party  8 customer  delivery  locations   account  for 60% of the  market. (277)

(295)    The  market  investigation  confirmed   that   several  French  retailers  have   warehouses or consolidation warehouses to which the suppliers deliver  the  products  and  from which  the  retailers  distribute   to their  network  of stores (278).

(296)    Accordingly, the results of  the  market  investigation  suggest  that  suppliers  of Italian-type cheeses are able to distribute  their  products  in  France  through  third parties  (outsourcing).

(297)    Even if owning logistics assets in France, in some cases, seems  to  provide  a competitive advantage, following  the  Transaction,  at  least  four  other  suppliers  will own  distribution/logistics  assets in  France, besides  the  Parties (279):  Granarolo, Savencia, the joint venture of Emi and Ambrosi  (Diprola), and  Zanetti.  These companies active amongst others on the market for  cow  mozzarella,  are likely  to  be able  to exercise  significant  competitive   pressure  on the  Parties  in France.

(298)    Fifth, there have been recent new entrants in  the  cow  milk mozzarella  market  in  France. Namely Giovanni Ferrari entered the French  market  in  2011,  mainly  with  hard cheeses and  started  producing  mozzarella  in  2019  while  previously  specialised  in  the  production  of  Parmigiano   Reggiano.   Although   this   company   remains   a family owned business, Savencia Fromage & Dairy holds a 49% shareholding in  Giovanni Ferrari. Savencia is  a  French  publicly  listed  dairy  company  active worldwide.

(299)    In 2019, Giovanni   Ferrari started  selling  branded cow-milk   mozzarella   in France.

(300)    On the supply side, existing players are increasing their production capacity to accompany  the growth  of mozzarella   consumption  in  the EEA.

(301)    According to the Parties the following  competitors have  made  investments  in mozzarella  production (280):

(a)   Granarolo recently invested to increase the production  capacity  of  its mozzarella   plant  in  Usmate (Italy);

(b)   Valcolatte recently acquired  a  new  line  for the  production  of  mozzarella cubes;

(c)   Bayerland recently acquired  three  lines  for the  production  of  mozzarella  cubes.

(d)   In July 2018, Glanbia announced setting up an entire new plant in Portlaoise (Ireland) and investing EUR 130 million for this project. The  new  plant  is  expected  to  start  the  production  in  2020,  with  a  capacity  of 45,000  tons per annum; (as an indicative comparison panel data  for sales  of  cow  milk mozzarella in France  estimated  the  market  size  to  be  25 373 tons  as reported in  Table 5)

(e)   In April 2018,  Berglandmilch announced its decision to invest EUR 17.5 million to open a new plant in Aschabch (Austria). The  plant  is  planned to produce mozzarella in 3 shifts on 6 days, to be  able  to  produce  20,000 tons of Mozzarella  per annum;

(f)   In November 2017, BMI announced  setting  up  a  new  plant  in  Jessen (Germany)  which  is  expected  to  expand  the  company’s  production  capacity by around  2.5 tons  per hour;

(g)   In July 2017, DMK announced that it invested EUR 15 million in  its  Nordhackstedt plant to be  able  to  provide  Arla  with  35,000  tons  of mozzarella  each  year.  Nordhackstedt   site   has   a   capacity   of   approx. 70,000 tons, of which half is dedicated to mozzarella. The  aim  with  this investment  is  convert  the  site   into   a  pure  mozzarella  plant  (and  thus  double its  production)  by 2020.

(302)    The  market  investigation  suggested  low  barriers   to  switching,   and   provided evidence that customers appear to be able to switch suppliers. As mentioned in paragraphs (281) to (283) Nuova Castelli lost important private label cow milk mozzarella sales volumes with retailers and Lactalis captured only part  of  these  quantities. This tends to show that retailers have other sources  of  supply  for  their  private  label  products  than Nuova  Castelli  and Lactalis.

(303)    A majority of retailers expressing views submitted that they have not switched their private label supplier in the last 3 years (281). However, there  were  several  instances  where retailers indicated that they have switched  suppliers,  either  by  awarding  a low-tier segment  to  a  German supplier,  or  by  contacting  alternative  suppliers, which  are already  present  on the market (282).

(304)    The retailers confirm that they have the ability to switch between suppliers with the majority of  French  retailers  expressing  views  submitting that  they  have  three  or more than three viable suppliers of private label cow milk mozzarella at  any  given time (283).

(305)     […].

(306)    In conclusion, in light of the above and based on the information available to the Commission  and  provided  by  Parties,  the  Commission  considers  that   the Transaction does not raise serious doubts in the market for cow milk  mozzarella  in France  under  any plausible   product market definition.

5.5.2. Buffalo milk mozzarella

(307)    Lactalis supplies only branded  buffalo milk mozzarella,  whereas  Nuova  Castelli supplies  private  label  buffalo   milk   mozzarella   in France.

(A) Branded buffalo milk mozzarella in  France

(308)    For branded buffalo milk mozzarella the combined  Adjusted  market  share  of  the  Parties in 2018 in France was [20-30]% (in volume), with Nuova Castelli adding an increment   of [0-5]% to Lactalis’   [20-30]% market share. (284)

(309)    First, Nuova  Castelli had  limited  sales  of  branded  buffalo milk mozzarella  in   France  in  2018 and thus  does not  enjoy strong  brand presence.

(310)    Second, after the Transaction, the merged entity will continue to face  significant competitive  pressure  from the  strongest  competitor to Lactalis,   Granarolo. According to the data provided by the Parties  and  based  on  the  Commission’s analysis (see Section 5.2), in 2018 Granarolo represented a stronger competitive constraint than Nuova Castelli with regard to  branded  buffalo milk mozzarella  in  France. Granarolo’s sales of branded  buffalo milk mozzarella  were  significantly  higher than Lactalis’ and Nuova Castelli’s sales and accounted for [10-20]%  of the overall  buffalo   milk   mozzarella   market  in France.

(311)    Third,  the  merged  entity  will  also continue   to  face   significant   competitive  constraints from other branded suppliers which in  2018  had  combined  sales  of branded buffalo milk mozzarella that  accounted  for  [20-30]%  of the  overall  buffalo milk   mozzarella   market  in France.

(312)    The Commission has  also  considered  in  its  assessment  that  the  arguments  presented in the below section as regards the overall market, and in particular concerning  the absence of significant barriers to entry and expansion and the availability of other  suppliers with respect to this plausible  market  also apply  to  the  assessment  of branded  buffalo   milk   mozzarella   in France.

(313)    In view of the above, the Commission  finds that  the  Transaction  does  not  raise  serious doubts as to its compatibility with the internal market  with  regard  to  the  branded  buffalo   milk   mozzarella   in France.

(B) Overall market of buffalo milk mozzarella in France

(314)    Based on the market share data submitted by the Parties and  in  light  of  the methodology described in Section 5.2, the combined market shares of the Parties in branded and private label in volume terms in 2018 were:  [50-60]%  (Lactalis: [10-20]%; Nuova Castelli:  [40-50]%).

(315)    The  Parties'  activities  in  relation  to  buffalo   milk   mozzarella   in  France  give   rise  to an affected market if the overall market including branded and private label was considered.  Although,  post-Transaction  the   Parties   will   have   large   combined market shares, the  Commission  considers  that  the  concentration does  not  raise serious doubts for the supply of buffalo milk mozzarella in France for the following  reasons.

(316)    First,  there  are several strong  competitors  already  supplying  the  retailers  in  France.

(317)    As can be seen from the market structure in the Table provided above, in France, branded buffalo milk mozzarella covers a significant share of demand (more than [50-60]%). There are other players in the branded segment. For example, sales of Granarolo exceed Lactalis’ sales significantly and it exerts a much more significant competitive constraint than  Nuova  Castelli,  which  has  very  limited  sales  in  the branded segment.

(318)    As regards the private label segment, Nuova Castelli is likely the largest  supplier  of private label buffalo milk mozzarella. However, based on the data provided by the  Parties, other important  suppliers  of  private  label  buffalo milk mozzarella  are Granarolo with an estimated  market  share  of  [10-20]%;  Caseificio  Principe ([5-10]%), Spinosa ([0-5]%) and Ambrosi ([0-5]%)  in  the  overall  market  of  branded  and private  label  goods combined.

(319)    Second, the Commission considers that the Parties are not close competitors for the supply of buffalo milk mozzarella in  France.  The  Commission  notes  that  Nuova Castelli produces  and  trades   buffalo   milk   mozzarella. (286)   However,   Lactalis   does not produce buffalo milk mozzarella but only trades a limited  volume  under  its  own brand.

(320)    Third, based on the data provided by the  Parties,  Lactalis  trades  buffalo milk  mozzarella  manufactured  by  […],  […],  and  […]. (287)  The  Notifying  Party  submits that its contracts with these suppliers, including volumes, are  negotiated  on  […]  basis. (288) The  Commission  notes  that  one  of  the  listed  suppliers  already  has  access to the French retailers and for the others, their  contracts  with  Lactalis  are  not  long- term. Accordingly, if post-Transaction, the merged entity increased prices  these companies  could  likely   increase  supplies  or try to enter  the  market  directly.

(321)    Fourth, the Commission considers that there are no significant  entry  or  expansion barriers  to the  market for  buffalo   milk   mozzarella   in France.

(322)    The  market  investigation  suggested  that  a  potential barrier  could  be   the   more limited availability of buffalo milk, which is scarcer than cow milk as explained  in paragraph (195). However, there is a range  of players  already active  on the  market  and this  is  not regarded  as particularly  problematic   by the  Parties'  competitors, (289)

(323)    Similarly  distribution  and  logistics  are  not  regarded  as  particularly  problematic   by the Parties' competitors as explained in paragraphs 288 to 297 for cow milk mozzarella where the organization of distribution through third parties is a  viable alternative,  and  given  the  similarity  of  the  products  this  would  apply   also   in relation  to buffalo   milk   mozzarella.

(324)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal  market  on  the  plausible  market  for  branded buffalo   milk   mozzarella   in France.

(325)    Based on the above considerations and in the light of the results of the market investigation,  the  Commission  considers  that the  concentration   does   not   raise serious doubts as to its compatibility with the internal market as regards the  overall market for  the  supply  of buffalo   milk   mozzarella   in France.

5.5.3. Ricotta

(A) Branded ricotta in France

(326)    For branded ricotta, the combined Adjusted market share of the Parties in 2018  in France was [30-40]%, with a marginal increment of [0-5]% in view  of  Nuova Castelli’s   very  limited   brand presence. (290)

(327)    First, Nuova Castelli had very limited sales of  branded  ricotta  in  France  in  2018 ([…]). The Transaction will bring a marginal increment to Lactalis’ market share of [0-5]%.

(328)    Second, after the Transaction, the merged entity will continue to face significant competitive     pressure     from    the     strongest     branded    competitors     to    Lactalis, e.g. Granarolo. According to the data provided by the Parties and based on the Commission’s analysis (see Section 5.2), in 2018 Granarolo represented a superior competitive constraint than Nuova Castelli with regard to branded ricotta in France. Granarolo’s recorded sales of branded ricotta were  […]  and  accounted  for [10-20]% of the overall  ricotta  market  in  France  (see Table  7 below).

(329)    Third,  the  merged  entity  will  also continue  to  face   significant   competitive  constraints from other branded suppliers, such as Ambrosi, which in 2018  had  combined sales of branded  ricotta significantly  above  those  of  Nuova  Castelli.  These suppliers of branded ricotta will  remain  in  the  French  market  post- Transaction.  These suppliers  accounted  for [5-10]%  of  the  overall market  for ricotta  in France  in 2018 (see Table  7 below).

(330)    Fourth, with regard to the ability of customers to switch  suppliers  of  ricotta,  the majority of customers that  responded  to  the  market  investigation  considered  they could not quickly switch to an alternative supplier of branded  ricotta with  a comparable range and sufficient quantities; (291) however, the majority of responsive competitors and customers that expressed a view indicated  that  it  was  possible  and even easy to switch  suppliers   of ricotta. (292)

(331)    The Commission  has  also  considered  in  its  assessment  the  arguments  presented  in  the below section as regards the overall market, and  in  particular  concerning  the absence of significant barriers to entry and expansion,  the  availability of  other  suppliers and the impact of the Transaction that also apply  to  the  assessment  of branded ricotta.

(332)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard  to the  plausible   market of branded  ricotta  in France.

(B) Private label ricotta in France

(333)    Both Parties had sales of private label ricotta in France in 2018 and their combined market share in 2018 in France was [70-80]% (in volume), with an increment of [20-30]% due to Nuova  Castelli’s   increase  of sales  of private  label  ricotta  in 2018.

(334)    First, after the Transaction, the merged entity will  continue  to  face  significant  competitive pressure from several suppliers of private label ricotta that  in  2018 accounted for […] of private  label  ricotta sold in  France  (i.e.  [10-20]%  of  the overall market,  Table  7  below).  These suppliers  will  continue   to  exercise competitive  pressure  on  the  merged  entity  after the   Transaction.   Although   the actual sales of private  label  of  other  competitors are  not  available,  the  Notifying Party estimates that Granarolo has  a  significant  share  of  [20-30]%,  and  Fior  di Maso [0-5]% (293)  is  also active  on the private  label  market  for  ricotta  in  France.

(335)    Third, with regard to the  ability  of  customers  to  switch  suppliers  of ricotta,  half  of  the responsive customers that expressed a view  indicated  that  they  could  quickly  switch to  an  alternative  supplier  of  private  label  ricotta  with  a  comparable  range  and  sufficient  quantities. (294)

(336)    The Commission  has  also  considered  in  its  assessment  the  arguments  presented  in  the below section as regards the overall market, and  in  particular  concerning  the absence of significant barriers to entry and expansion,  the  availability of  other  suppliers and the impact of the Transaction  that  also apply  to  the  assessment  of private  label  ricotta.

(337)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard  to the  plausible   market of private  label ricotta  in  France.

(C) Overall market for ricotta in France

(338)    Based on the Commission’s methodology, Adjusted market shares  for  the  overall market for  ricotta  in France  are as follows.

(339)    The Transaction results in an  affected market  due  to  the  Parties’  sales  of  private label ricotta,  bringing  an increment  of Lactalis’  market share  of   [20-30]%.

(340)    Beside the  shares  of  the  market  for  ricotta  in  France,  the  Commission  considers  that  the  Transaction  does not  raise  serious  doubts for  the following reasons.

(341)    First, after the Transaction, the merged entity will  continue  to  face  significant  competitive pressure  from  Granarolo ([10-20]%).  According  to  the  data  provided  by the Parties and based on the Commission’s analysis (see  Section  5.2  above),  in 2018 Granarolo represented a comparable competitive constraint  to  Nuova  Castelli  with regard to  the  overall  market  for  ricotta  in  France.  Granarolo’s  recorded  sales in the overall market of ricotta were slightly below  Nuova  Castelli’s  sales  and  accounted  for [10-20]% of the  overall  ricotta  market  in France (see Table  7  above)

(342)    Second,  the  merged  entity  will  also continue   to  face   significant   competitive pressure from several branded and  private  label  competitors,  including  Ambrosi. These suppliers accounted  for  [10-20]%  of the  overall  market  for  ricotta  in  France in 2018 (see  Table  7  above).  These  competitors  together  with  Granarolo  are  likely to continue exercising competitive pressure on the merged entity comparable to the pressure  exercised  by Nuova Castelli  on Lactalis   pre-Transaction.

(343)    Third, with regard  to  the  ability  of  customers  to  switch  suppliers  of  ricotta,  while  the majority of customers that  responded  to  the  market  investigation  had  not switched suppliers of branded or private label ricotta in the last three years, (296)  the majority of responsive competitors and  customers  that  expressed  a  view  indicated that  it  was possible  and even  easy to switch  suppliers   of ricotta. (297)

(344)    Fourth, concerning barriers  to  entry  and  expansion,  different  from other  fresh  cheese products discussed above for which access to milk has been assessed as a potential barrier to entry, ricotta is produced from a by-product of other cheese production.  In  particular,  as  explained  by  the  Notifying  Party,  ricotta is  manufactured by heating whey to 80° C.  The  market  investigation  confirmed  that ricotta is a by-product of whey, (298) which  is  a  liquid  derived  from  the  production of soft and fresh cheese (e.g. mozzarella). (299) The Parties use their leftovers of whey to produce ricotta as well as milk powder. Nuova  Castelli also  sells  part of its  whey to third  parties.

(345)    Moreover, the market investigation also  indicated  that  there  has  been one  entrant  in the market for ricotta in France in the last 5 years (300) and the majority of responsive customers indicated  that  there  were  not  significant  barriers  to  entry  or  expansion for  ricotta  in  terms  of costs and time  in  their  countries. (301)

(346)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market  on  the  plausible  markets  for  branded  ricotta  in France  as well  as private  label ricotta  in  France.

(347)    In conclusion, in light of the above and based on the information available to the Commission  and  provided  by  Parties,  the  Commission  considers  that   the Transaction  does not raise  serious  doubts  in  the  overall  market  for ricotta  in France.

5.5.4. Mascarpone

(348)    At the outset it should be noted Nuova Castelli does not produce, but only trades, mascarpone. It purchases […]% of its  requirements  from  […]  and  resells  it  as  further  developed  in  paragraphs  (368) to (369).

(A) Branded mascarpone in France

(349)    First, Nuova Castelli had  limited  sales  of  branded  mascarpone  in  France  in  2018. The Transaction will bring  a  limited  increment  to  Lactalis’  market  share.  Based  on  the Adjusted market shares for 2018,  the  combined  market  share  of  the  Parties  would  be [50-60]% with  [5-10]% increment. (302)

(350)    Second, after the Transaction, the merged entity will continue to face significant competitive pressure from Granarolo. According to the  data  provided  by the  Parties and based on the Commission’s analysis (see Section 5.2), in 2018 Granarolo represented a superior competitive constraint than Nuova Castelli with regard  to branded  mascarpone    in    France.  The    recorded   Granarolo’s    sales    of  branded mascarpone  were  significantly  higher than  Nuova   Castelli’s   sales   and   accounted for  [5-10]% of the  overall  mascarpone  market  in France.

(351)    Third,  the  merged  entity  will  also continue  to  face   significant   competitive   constraints from four other branded suppliers (Granarolo, Ambrosi, Galileo, and Sterilgarda) which have  been  identified as  top  3  suppliers  of  branded  mascarpone by at least one French retailer in the market investigation (303). In addition branded mascarpone will continue facing competition from private label mascarpone which represents  three  quarters  of the mascarpone  market.

(352)    The Commission has  also  considered  in  its  assessment  that  the  arguments  presented in the below section as regards the overall market, and in particular concerning the absence of significant barriers to entry and expansion, the  availability of  other  suppliers, evidence of  switching  and  lack of  barriers  to  switching  with  respect  to  this  plausible  market also  apply  to the  assessment  of branded  mascarpone.

(353)    In view of the above, the  Commission  finds that  the  transaction  does  not  raise serious doubts as to its compatibility with the internal market with  regard  to  the  plausible   market  for  branded mascarpone  in France.

(B) Private label mascarpone in France

(354)    First, both Parties had sales of private label mascarpone in France in 2018 and the combined market share in terms of volume is [40-50]% (Nuova Castelli [30-40]%, Lactalis  [10-20]%).

(355)    Second, after the Transaction, the merged entity will continue to face  significant competitive  pressure  from several  suppliers  of  private  label  mascarpone  that in 2018  accounted  for more than  […]  of  private  label  mascarpone  sold   in  France (i.e. [30-40]% of the overall market based on the panel data). These suppliers will continue  to exercise competitive  pressure  on  the  merged  entity  after   the Transaction.

(356)    The Commission has  also  considered  in  its  assessment  that  the  arguments  presented in the below section as regards the overall market, and in particular concerning the absence of significant barriers to entry and expansion, the  availability of  other  suppliers, evidence of  switching  and  lack of  barriers  to  switching  with  respect  to  this  plausible   market also  apply  to the  assessment  of private  label mascarpone.

(357)    In view of the above, the Commission  finds that  the  Transaction  does  not  raise  serious doubts as to its compatibility with the  internal  market  with  regard  to  the  private  label  mascarpone  in France.

(C) Overall market for mascarpone in France

(358)    Based on the Commission’s methodology, Adjusted market shares  for  the  overall market for  mascarpone  in France  are as follows.

(359)    The Transaction mainly results in an affected market because of  Lactalis’  market presence with branded products, with strong brands, such as Galbani and Nuova Castelli's   presence  in the  private  label  market for  mascarpone  in France.

(360)    Beside the considerations concerning the competitive landscape and shares  of  the  market for mascarpone in  France,  the  Commission  considers  that  the  Transaction does not  raise  serious  doubts  for  the following reasons.

(361)    First, after the Transaction, the merged entity will  continue  to  face  significant  competitive pressure from Granarolo and other brands as well as from private label competitors.  These competitors are  likely to  continue   exercising   competitive pressure on the merged entity  comparable  to  the  pressure  exercised  by  Nuova Castelli  on Lactalis   pre-Transaction.

(362)    Second, with regard to the ability of customers to switch suppliers of mascarpone, a majority of customers that responded to  the  market  investigation  considered  that  it  was possible to switch to a different supplier of mascarpone (305). Moreover  one customer switched  in  the  last  3 years its  branded  mascarpone  supplier  'Switched for a new, cheaper mascarpone produced in [S]pain' (306).

(363)    Moreover, in relation to the fact that  Nuova  Castelli distributes  […] products,  there was at least one example of  switching  which  concerned  […]  being  capable  to directly supply its products in  competition  with  the  Parties.  In  particular,  one customer  indicated  that  'This year we contracted directly with […].' (307)

(364)    The  Commission  further  observes,  as  further  explained   below,  that  the   possibility for […] to establish a direct presence on the market  would  potentially  entail  that,  beside the shares for 2018, in the near future there may no longer  be  an  overlap between the  Parties'  activities   on this market.

(365)    Third, the Commission notes that, according to the Notifying Party, to produce mascarpone, dairy companies can use the milk fat either to produce either cream or mascarpone. Manufacturing mascarpone is a  way  to  add  value  to  the  left  overs  of  the production of cheese. Dairy companies in Italy have a particular incentive to manufacture   mascarpone:  the market  for  cream is very  small  in Italy.

(366)    In view of this, the market  investigation  confirmed  that  investment  to  enter  mascarpone  production  is  relatively  low.  According to the  Notifying  Party investments for the  production  of  1,000  tons  of  mascarpone  would  amount  to roughly EUR 1 million. By way of comparison, the entire Lactalis private label mascarpone  sales  in  France  are […]. (308)

(367)    This  finding  was confirmed  also by  retailers  responding   to  the   market   investigation. With regards to potential barriers to entry when asked if there are any significant barriers to the entry or  expansion  for  mascarpone  in  terms  of costs  and  time a majority of French retailers answered that there aren't any.  Among  the  few French  retailers  which  indicated  that  there  would  be  barriers,   the   qualitative analysis of their answers shows that  the  barriers  mainly  relate  to  economies  of scale for logistics in general  or  for marketing  in  branded  products  specifically.  For example one retailer submitted:'It is necessary to rely on an  existing  logistic  to reduce transport costs in France.. (309)'; and  the  other  one  further  specifies  on branded mascarpone: 'It would be difficult to deliver exclusively mascarpone for logistics and brand interest reasons. It is preferable to have a full range of  products including mozzarella  and/or ricotta and/or hard cheeses'. (310)

(368)    Fourth, there has been a new entrant in the mascarpone market  in  France.  As  mentioned in paragraph (348), Nuova Castelli does not produce, but only trades, mascarpone. As explained by the Parties, Nuova Castelli  procured  the  mascarpone from […] (approx. […]) and concluded contracts with  retailers  to  sell that  mascarpone  as  private  label.  However,  […]  has  unilaterally indicated  that  it  does not wish to continue this commercial relationship. In […], […] put an end to its contractual relationship with Nuova Castelli. (311) The  Parties  expect  that  […]  will  try and  contract  directly  with  the  retailers,  in  effect  taking  over  Nuova  Castelli’s  market share.

(369)    In France, for instance, according  to  the  Notifying  Party,  […]  has  taken  over Nuova Castelli’s market share in relation to the […],  or at least to  the […] brand. (312)  The fact that […]  is  distributing  directly  its  own  products  to  French  retailers  is further   confirmed   by  market   investigation.   One   retailer   confirmed:  'This  year  we contracted directly  with  […]'' (313),  while  another  retailer  specifically  mentionned  […] as an alternative   to the Parties. (314)

(370)    Given the uncertain contractual relationship of Nuova Castelli with its supplier of mascarpone, Nuova Castelli's presence on the private label market segment is also uncertain, at least until it finds a new alternative producer. However, in light of the explanations  of  the  Parties  and  the  retailers  responding  to  the  market  investigation,  it is likely that […] market  share  will  significantly  increase.  Most  importantly  this shows that entering the  market  for  mascarpone  is  possible,  as indicates  the  example  of […], a company operating a plant with 10  production  lines  dedicated  to mascarpone,  ricotta  and other  spreadable cheeses.

(371)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market on the plausible markets for branded mascarpone  in  France as well  as private  label  mascarpone  in France.

(372)    In conclusion, in light of the above and based on the information available to the Commission  and  provided  by  Parties,  the  Commission  considers  that   the Transaction does not raise serious doubts in the overall market for mascarpone  in  France.

5.5.5. Gorgonzola

(373)    Lactalis supplies both branded and private label Gorgonzola to retailers in France, whereas Nuova Castelli supplies private label Gorgonzola  to  retailers  in  France,  as  well  as  very  limited  volumes  of  branded  Gorgonzola.  Therefore,  the  Commission  will assess the likely effects of the Transaction  on  each  of the  branded  and  private label segments,   as well  as on the overall  market for  Gorgonzola  in   France.

(A) Branded Gorgonzola in France

(374)    First, as regards branded Gorgonzola, the Transaction  results  in  an  affected  market only because of Lactalis’ market presence with branded products, with strong  and  widely recognised brands of Gorgonzola, and  in  particular  Galbani  and  Gim  Invernizzi.

(375)    The shares submitted by  the  Parties,  however,  may  overstate  the  Parties'  presence  on this market, as suggested by the fact that, when using  Adjusted  shares based on  panel data, the market would not be affected, with a combined market shares of the Parties on such a  plausible  market  at  [10-20]%,  with  a  negligible  increment  of merely [0-5]%.

(376)    Second, this is consistent with the fact that, as a  producer,  Nuova Castelli does not enjoy strong presence in  Gorgonzola,  as  this  type  of cheese  is  exclusively  produced in the  PDO  territory  in  northern Italy.  As  confirmed  by  a  third  party,  Nuova Castelli is a much smaller member of the consortium than  players like  Igor  or Lactalis. (315)

(377)    Third,  several  other  strong  competitors of  Lactalis  supply branded  Gorgonzola, such as, Igor, the undisputed market leader, as  well  as  Ambrosi and  Vivaldi,  all  of them  enjoying  market  shares  similar   to  that  of  Nuova  Castelli.  Overall,  the  Parties’ competitors in the plausible branded market have a strong presence with important brands,  which  account  for over 3 times  the  Parties’  share  of this  market  in France.

(378)    Consistently with these market shares, which point at a fragmented  set  of suppliers which are as large as,  or  even  larger  than,  Nuova  Castelli  in  the  branded  market,  the market investigation supports the  finding  that  a  number  of  credible  competitors  can and  do  offer  volumes  of branded Gorgonzola  to retailers in France and compete   in  the  negotiations   organised  by retailers.

(379)    A majority of  customers expressing views  indicated  that  they  source  from a relatively wide range of suppliers of branded  Gorgonzola.  In  particular,  the  data  shows that many of those retailers have sourced from one or more other players independent  from  the  Parties  in 2018. (316)

(380)    Therefore, the increment brought about by the Transaction is  minimal  and  several credible manufacturers  with  established   commercial   relations   with   retailers   in France  will  remain  following  the  Transaction.

(381)    The Commission  has  also  considered  in  its  assessment  the  arguments  presented  in  the below section as regards the overall market, and  in  particular  concerning  the absence of significant barriers to entry and expansion, the  availability of  other  suppliers, and  the  impact  of  the  Transaction  with  respect  to  this  plausible  market also  apply to the assessment  of branded  Gorgonzola.

(382)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard  to the  plausible   market of branded  Gorgonzola  in France..

(B) Private label Gorgonzola in France

(383)    Nuova Castelli focuses in France on the  supply  of  Gorgonzola  to  retailers  to  be  resold under private label. In this plausible market, the position of Nuova Castelli is stronger.

(384)    Based on the data provided by the Parties, their  combined  share  in  the  supply (including variable  weight)  of  private  label  Gorgonzola  to  retailers  in  France  in terms of volume in 2018  was  [30-40]%,  with  an increment  of [5-10]%.  Therefore, the increment resulting from the Transaction also on the  private  label  side  of  the  market  is moderate.

(385)    Moreover, a number  of  viable  competitors  offer  volumes  of Gorgonzola  to  retailers  in France and compete in the tenders organised by retailers  for private  label Gorgonzola. A majority of customers expressing views in the market investigation indicated that they source from a relatively  wide  range  of  suppliers  of Gorgonzola,  Igor being the most important. In particular, the data shows that  many  retailers expressing   views   sourced    from    other    players    independent    from    the    Parties in 2018. (317)

(386)    The Commission  has  also  considered  in  its  assessment  the  arguments  presented  in  the below section as regards the overall market, and  in  particular  concerning  the absence of significant barriers to entry and expansion, the  availability of  other  suppliers,   and the impact  of the  Transaction.

(387)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard  to the  plausible   market of private  label Gorgonzola  in  France.

(C) Overall market for Gorgonzola in France

(388)    Based on the Commission’s Adjusted market shares, the combined market share of Lactalis and Nuova Castelli is  [20-30]%,  with  an  increment  of  [10-20]%.  In  line with the findings for  the  separate  segments  for  branded  and  private  label  products, the  increment   of the Transaction  mainly   relates  to the supply  of branded products.

(389)    The Commission observes that the market for Gorgonzola appears to be rather fragmented with several active players both in the branded and private  label  segments. (319) The  Commission  considers  that  following  the  Transaction,  several credible competitors will continue to  exert  effective  competitive  pressure  on  the Parties, in particular, Igor, Vivaldi, Ambrosi, but also other  manufacturers  of  Gorgonzola   (e.g. Emilio   Mauri,  Biraghi  Bassi).

(390)    Beside the considerations concerning the market structure of Gorgonzola,  the Commission finds, based on the market investigation, that barriers to  entry  and expansion  are not high  for  suppliers  of Gorgonzola  in   France.

(391)    When market  conditions  are  such  that  competitors  have  sufficient  capacity  and  find  it  profitable  to  expand  output  sufficiently,  the   Commission  is   unlikely   to  find   that the merger would  significantly  impede  effective  competition. (320) Conversely, when market conditions are such that the competitors of the merged entity are unlikely to increase   their   supply   significantly   should   prices   increase,   the   merged   entity   may have an incentive to reduce output below the combined  pre-merger  levels  thereby  raising  market prices. (321)

(392)    First, from the point  of  view  of  customers,  the  market  investigation  suggested  that  the majority of retailers expressing views did not indicate  that  there  are  barriers  in  terms  of cost and time. (322)

(393)    Second, from the point of view of production, the majority of market respondents indicated that the costs and delays to incur to enter or expand production are not significant. (323)

(394)    Third, it should  be  recalled  that  the  market  for  Gorgonzola  is  strictly  regulated  by  the Consorzio Gorgonzola  PDO.  The  production  of  Gorgonzola  is  affected by  quotas of membership in the consortium and that  the  consortium controls the production  levels.  While  both  Parties  are  members  of  this   consortium,   Lactalis share amounts to [10-20]%, and Nuova Castelli’s share is much smaller. A  large  majority of consortium quotas remains in the hands of  other  producers,  including  leading  member  Igor which  represents  [40-50]% of the  consortium.

(395)    The Notifying Party explained that the production of Gorgonzola for  the  domestic market, as well as  the  exports  of Gorgonzola  outside  of Italy,  are largely dominated  by the market leader Igor, which accounts for [40-50]% of the total production of Gorgonzola and [60-70]% of the total exports  outside of  Italy.  By  comparison, Lactalis and Nuova Castelli respectively account for  [10-20]%  and  [0-5]%  of  the  total production of Gorgonzola. Likewise, they  respectively account  for only  [10-20]% and [0-5]% of the  total exports  outside  of Italy. (324)

(396)    As a consequence, the Parties only account for a limited part of the production and exports outside of Italy,  so  that  retailers  in  France  could  likely find  alternative sources  of supply  for Gorgonzola.

(397)    Consistent with  the  above  findings,  the  majority  of  customers  in  France  responding in the market investigation do  not  consider  that  the  Transaction  will  have  an impact on the  supply  of Gorgonzola. (325)

(398)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market on the plausible markets for branded Gorgonzola  in France as well  as private  label Gorgonzola  in    France.

(399)    Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the Transaction does not raise  serious doubts as to its compatibility with the internal market on the overall market  for  the  supply  of Gorgonzola   in France.

5.5.6.  Feta

(400)    At the outset it should be noted that  Nuova  Castelli  does  not  produce,  but  only trades Feta. It purchases  […]% of its  requirements  from  third  parties  such as […].

(401)    With  regard  to Feta PDO, the Notifying  Party indicates  that:

(a)   Nuova Castelli does not produce Feta PDO, it only acts as a trader. Nuova Castelli has a  distribution  agreement  with  the  producer  […]  (and  other  various small producers). Nuova Castelli sells […] of  Feta  PDO  across  the EEA,  and more  precisely  in  France,  the UK, Poland  and Portugal;

(b)   Lactalis produces Feta PDO in Greece (Volos) and sells […]  of Feta  PDO  across the EEA, and more precisely in Germany  and  Austria (326) but  not  in  France.

(402)    It follows from these elements  that  the  Transaction does not  raise  serious  doubts  in  the  French market  for  the  supply  of branded Feta PDO.

(403)    However considering all plausible market definitions, there would be an overlap considering the market for Feta  and  Feta-type  cheese  such  as  Lactalis  brand  Salakis.

(A) Branded Feta-type cheeses in France

(404)    First, Nuova  Castelli  had  de  minimis  sales  of branded  Feta-type  cheeses  in  France in 2018. The Transaction will bring a limited increment to  Lactalis’  market  share  of under  [0-5]% (327).

(405)    Second, after the Transaction, the merged entity will continue to face significant competitive pressure from Bel. According to the data provided by  the  Parties  and  based on the Commission’s analysis (see Section 5.2), in 2018 Bel represented a far superior competitive  constraint  than  Nuova  Castelli with  regard  to  Feta-type  cheeses  in France.

(406)    The Commission has  also  considered  in  its  assessment  that  the  arguments  presented in the below section as regards the overall market, and in particular concerning  the absence of significant barriers to entry, the  availability of  other  suppliers,  lack of barriers to switching with respect to this plausible  market  also apply  to  the  assessment  of branded  Feta-type cheeses.

(407)    In view of the above, the Commission  finds that  the  Transaction  does  not  raise  serious doubts as to its compatibility with the internal market with  regard  to  the  plausible   market for  branded Feta-type cheeses in   France.

(B) Private label Feta-type cheeses in France

(408)    First, both Parties had sales of private label Feta-type cheese in 2018 and  their  combined   market    share    was    [40-50]%.    (Lactalis:    [20-30]%,    Nuova Castelli: [10-20]%).

(409)    Second, after the Transaction, the merged entity will continue to face significant competitive pressure  from  several  suppliers  of  private  label  Feta-type  cheeses  that in  2018  accounted  for […]  of  private  label  Feta-type  cheeses  sold   in   France  (i.e. [20-30]% of the overall market). These suppliers will continue to exercise competitive   pressure  on the merged  entity  after  the Transaction.

(410)    The Commission has  also  considered  in  its  assessment  that  the  arguments  presented in the below section as regards the overall market, and in particular concerning  the absence  of  significant   barriers  to  entry,   the   availability   of  other  suppliers, lack of barriers to switching with respect to this plausible  market  also apply  to  the  assessment  of private  label  Feta-type cheeses.

(411)    In view of the above, the Commission  finds that  the  Transaction  does  not  raise  serious doubts as to its compatibility with the internal market with  regard  to  the  plausible   market for  private  label Feta-type cheeses in   France.

(C) Overall market for Feta-type cheeses in France

(412)    Based on the Commission’s methodology, Adjusted market shares  for  the  overall market for  ‘Feta-type’ cheeses in  France are as  follows.

(413)    The Transaction results in an affected market because of  Lactalis’  large  market presence with branded products, with strong and widely recognised brands, such as Salakis. Nuova Castelli has a more limited presence  in  the  overall market  for  Feta- type cheeses in France, brining an increment of [10-20]% to Lactalis’ market share almost  exclusively  from  private  label sales.

(414)    Beside the considerations concerning the competitive landscape and shares  of  the  market for Feta-type cheeses in France, the  Commission  considers  that the Transaction  does not raise  serious  doubts  for the  following  reasons.

(415)    First, after the Transaction, the merged entity will  continue  to  face  significant  competitive pressure from Bel with the Syrtos Brand on the branded  side.  On the  private label side there are several credible alternatives. The  Parties  listed  the competitors and  indicated  an  estimation  of  their  private  label  market  share  in France as follows:  Arla:  [10-20]%;  LA  Farm:  [10-20]%;  Tyras: [5-10]%; Hochland:  [5-10]%.  These competitors   are   likely   to  continue   exercising competitive pressure on the merged entity comparable to the pressure exercised  by Nuova  Castelli  on Lactalis  pre-Transaction.

(416)    In view of the Parties' activities, moreover, some  competitors  are  also  closer  to Lactalis as manufacturers of their own product, as opposed to Nuova  Castelli which does not have  manufacturing  activities   for  Feta-type cheeses.

(417)    In both branded and  private  label,  the  existence  of  a  number  of  credible  competitors offering volumes of Feta-type cheeses to retailers in  France  and  competing in the negotiations organised  by  retailers  is  not  only  confirmed  by  qualitative  descriptions of  market  interaction  by  such   customers,   but   also  confirmed  by  actual  sourcing  information.   Data  collected   from  retailers  shows  that a majority of customers expressing views source from a relatively wide range  of suppliers.

(418)    The  market  investigation  suggests  that  there  is   a  significant   number   of  suppliers able to supply the French  market.  When  asked  for their  suppliers  the  French retailers  expressing views   listed   the   following   companies (329)   :   Pierre   Meyer GMBH, Icewind, Dodoni, Granarolo,  Olympus,   Alliance   Eurofood,   Per'Inter  Chirag.

(419)    Second, with regard to the ability of customers to  switch  suppliers  of  Feta-type cheeses, the market  investigation  confirmed  that  it  was  possible.  When  asked  for their ability to switch to  a  different  supplier  of  Feta  large  majority  of  French  retailers that expressed a view considered that the switch was possible for Feta-type cheeses. (330) Out of those respondents one said that it would be easy and the rest confirming that it would not be easy but  possible.  It  is  to  be  noted  that  the  one  saying that it  would  be  easy  confirmed  that  it  had  actually  switched  supplier  for  Feta in the  last 3 years. (331)

(420)    Third, concerning barriers to entry and expansion, the results  of  the  market  investigation  were  not  conclusive.  Half  of  the  French  retailers  that  expressed  a view in the market investigation indicated that there were significant  barriers  to  expansion in terms of costs and time, whereas  others  indicated  that  there  were  no  such barriers. (332)

(421)    However, market investigation confirms that entry and expansion is possible in  this  market as there have been new players expanding and continuing to expand on this market. When asked if there has been some new entrants in the last three years, a  French retailer explained: 'Olympus is very active on the  French  market, specifically on private label with very low prices. This competitor will continue to grow in France in the coming three years.' (333)

(422)    It is also to be noted  that  Nuova  Castelli  is  only  a  distributor  of  the  Feta-type  cheese products and that one its main suppliers […] has been mentioned as  an alternative   supplier  by two French  retailers.   (334)

(423)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market on the plausible markets  for  branded  feta-type  cheeses in France as well  as private  label  feta-type  cheeses in   France.

(424)    In conclusion, in light of the above and based on the information available to the Commission  and  provided  by  Parties,  the  Commission  considers  that   the Transaction does not raise serious doubts  in  the  overall  market  for Feta-type  cheeses  in France.

5.5.7. Italian-type hard cheeses

(425)    Lactalis supplies only branded Italian-type hard cheese,  whereas  Nuova  Castelli supplies  both branded and  private  label  hard  cheese in  France.

(A) Branded Italian-type hard cheeses in France

(426)    First, Nuova Castelli had de minimis sales of branded Italian-type hard cheeses  in France in 2018. The Transaction will bring a  limited  increment  of  [0-5]% (335)  to Lactalis’   market share  of [10-20]%.

(427)    Second, after the Transaction, the merged entity will continue to face  significant competitive pressure from other competitors. According to the data provided by the Parties and based on  the  Commission’s  analysis  (see  Section  5.2),  in  2018 Granarolo and Parmareggio represented a far superior competitive  constraint  than  Nuova  Castelli  with  regard  to branded  Italian-type  hard cheeses in  France.

(428)    The Commission has  also  considered  in  its  assessment  that  the  arguments  presented in the below section as regards the overall market, and in particular concerning the availability of other suppliers, lack of barriers to  switching  with  respect  to  this plausible  market also  apply to the  assessment  of branded Italian-type  hard    cheeses.

(429)    In view of the above, the Commission  finds that  the  Transaction  does  not  raise  serious doubts as to its compatibility with the internal market  with  regard  to  the  branded  Italian-type   hard cheeses.

(B) Overall market for Italian-type hard cheeses in France

(430)    Based on the market share data submitted by the Parties and  in  light  of  the methodology described in Section 5.2, the combined Adjusted market shares of the Parties  in  volume  terms  in  2018  were:  [20-30]%  (Lactalis:  [0-5]%;   Nuova Castelli: [20-30]%).

(431)    First, Lactalis depends on  the  supply  from  other  manufacturers,  such  as  […]  or […], for its trading activity of Italian-type hard cheeses. (337) The  Notifying  Party  explained   […]. (338)

(432)    Second, the Commission also observes that  the  branded  segment  in  the  overall  market for Italian-type hard cheeses  has  around [30-40]%  share,  which  would indicate  that  the  main competitive  constraint  in  the   market   comes   from  private label Italian-type hard cheeses,  irrespective  of  whether  it  belongs  to  the  same market or it  is assessed  as a constraint  from  outside  the  market.

(433)    Third, the very low increment due to Lactalis'  sales  of traded  products  shows  that,  even if in shares terms the increment for branded products is nominally higher; it is representative   of very  limited  volumes.

(434)    Fourth, competition for Italian-type  hard  cheeses,  which  encompass  products covered by a  Protected  Denomination  of Origin,  is  less  affected  by  brand  presence in view of the predominant role carried, with  respect  to  customer  recognition  and quality perception, by such denominations (Parmigiano Reggiano, Grana Padano). Therefore, it makes the assessment of a market only consisting  of branded  product  much less significant in this context. In particular, the  Parties  submitted  that  brands  carry  little  weight  as  the  selling  point  is  mostly  the  PDO  branding.  And   the  presence of the PDO logos on a cheese  wheel  or  bag  of  Parmigiano  Reggiano ensures and indicates to the consumer that this cheese is produced,  and  the  milk collected,  exclusively  in  the  PDO  area,  delivering   recognition   and   quality perception  expected  from  a  brand.  In  line   with  this  one  competitor  also  explained: "The PDO brands enjoy high notoriety that it takes away “space” from private brands and indirectly attracts attention of private labels”. (339)

(435)    Fifth,  with  reference  to  the  limited  quantities  supplied  by  Lactalis  as  a  trader  of these products  in  France,  there  exist  several  other  competitors who  compete  not only in the trading, but also as producers of PDO cheeses within Italian-type  hard  cheeses because they either have quotas in consortia  (Grana  Padano)  or obtain milk from  consortia  (Parmigiano  Reggiano).

(436)    The Parties do not overlap in this  respect, as Lactalis  is  not active  in the  production, and Nuova Castelli has limited overall shares of  production  in  relation  to  PDO  cheeses.

(437)    Sixth,  also  in  view  of this,  Lactalis  and Nuova  Castelli  are not close  competitors.

(438)    Seventh, different from other Italian-type cheeses, Lactalis is not recognised as an important player with respect to these products. In the  market  investigation  while Lactalis is mentioned by  two  retailers  among  main  suppliers  of  Italian-type  hard cheese in France, numerous other suppliers are also mentioned, Nuova Castelli, Granarolo,  Sodiaal,  Savencia, Trentin,   Latteria   Soerisina,   Colla,   Ambrosi, Fromagers associés, virgilio  and  Soster. (340)  The  fact  that  there  are  a  lot  of competitors on this market is confirmed  and  explained  by  a  French  retailer:  ‘There are a lot of competitors. Those are high value products with limited transport cost and large volumes.’  (341)

(439)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market on the plausible markets for branded Italian-type  hard cheeses as well  as private  label Italian-type  hard    cheeses.

(440)    Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the Transaction does not raise  serious doubts as to its compatibility with the internal market on the overall market  for  the  supply  of Italian-type  hard cheeses  in  France.

5.5.8. Other markets

(441)    The  Transaction  results  in  additional  affected   markets  in  France,  and  in  particular  in the  plausible   markets  for  fresh  dairy  desserts and butter.

(442)    However, in all  these  markets  the  Transaction  results  in  a  negligible  increment  due  to the small presence of Nuova Castelli,  bringing a  limited  increment  to  Lactalis’ shares.

(443)    On this basis the  Commission  finds that  the  Transaction  does  not  raise  serious doubts  concerning  these markets.

5.6. The  United Kingdom

(444)    Based on the market share data submitted by the Parties and  in  light  of  the methodology used (see Section 5.2), the Transaction gives rise to the following horizontally affected plausible markets in the United Kingdom (the UK): Cow milk mozzarella  (Section  5.6.1);   Buffalo   milk   mozzarella   (Section   5.6.2);   ricotta (Section 5.6.3); mascarpone (Section  5.6.4);  Gorgonzola  (Section  5.6.5);  Italian-  type  hard cheese  (Section 5.6.6).

5.6.1.Cow milk mozzarella

(445)    Both Lactalis and Nuova Castelli supply branded  and  private  label  cow  milk mozzarella in the UK.  Lactalis  is  the  largest  supplier  of branded  and  second  largest of private label cow milk mozzarella.  Nuova  Castelli  is  the  largest  private  label supplier  and  has  some  very  limited  sales  of  branded  cow  milk mozzarella.  In  light of this, the Commission will  assess  the  likely  effects  of the  Transaction  on  each  of the branded and private label segments, as  well  as  on  the  overall  market  for  cow milk   mozzarella   in  the UK.

(A) Branded cow milk mozzarella  in the United Kingdom

(446)    First, the Commission notes  that  the  third  party  data  relied  on  by  the  Commission  to establish the Adjusted market shares of the Parties and their competitors does not indicate   an overlap  for the  supply  of branded  cow milk  mozzarella.

(447)    An overlap between  the  Parties’  activities  was  only  identified because  actual supply data from  the  Parties  suggested  an  actual  delivery  of  very  minor  quantities  by Nuova Castelli to the UK in 2018 ([…]) of branded cow milk mozzarella. (342) Accordingly, based on the market share data submitted by the Parties, if potentially relevant segment for branded cow milk mozzarella was  considered,  the  combined  market shares of the Parties would be  [90-100]%  (Lactalis:  [90-100]%;  Nuova Castelli  [0-5]%). (343)

(448)    However, third party data, as explained in  Section 5.2,  does  not  specify  small sales and also does not track all outlets in the retail channel. This is  why,  in the  Adjusted market shares table Nuova Castelli appears not to have any presence in branded products. In light of this, the market shares as submitted by the Parties are likely overestimated. In particular, similarly to Nuova  Castelli,  other  suppliers,  which constitute a competitive pressure on the Parties, are  likely not recorded by the  same  data sources that do not record  Nuova  Castelli.  Similarly,  other  suppliers  recorded and specified by the third-party panel data (see Table  12)  would  likely  have  higher sales  than  Nuova Castelli,   are Granarolo,  Daiya,  and Valcolatte.

(449)    Second, the very low increment of [0-5]% to the market shares corresponds, as explained   above, to […] in  the  entire  year 2018.

(450)    Third, Nuova Castelli does not enjoy  strong  brand  presence.  As  the  Parties explained, Nuova Castelli specializes in the supply  of  private  labels,  its  brands  are  little known. (344) In  contrast,  the  majority  of  the  UK  customers  expressing  views  in  the   market  investigation   mentioned   Lactalis’   brand   Galbani  as  the   strongest brand for cow milk mozzarella. (345) In addition, none of the respondents  from  the  UK responding in  the  market  investigation  submitted  that  Nuova  Castelli  and  Lactalis  are close  competitors. (346)  The  Commission  considers  that  this  also supports  the finding that Nuova Castelli has  only  very  limited  importance  as  a  competitive constraint   for  the competition  in  the  branded segment.

(451)    Fourth,  several  additional  smaller  suppliers   of  branded  cow  mozzarella  will  remain in the UK market following the  Transaction.  These  suppliers  would  account  for  at  least [5-10]% of the  branded cow milk   mozzarella  supplies  in the    UK.

(452)    Fifth, the Commission observes that the branded  segment  in  the  overall  market  for cow milk mozzarella has only  approximately  [10-20]%  share  of the  overall  market. For example, some retailers in the UK  do  not  even  carry  branded  products  and  cover the  whole  demand for cow  milk mozzarella  with  private  label  Italian cheese. (347) The Commission considers that very small share  of  branded  segment indicates  that  the  main competitive  constraint  in  the  market  comes  from the  suppliers of private label cow milk mozzarella, irrespective of whether it would be assessed as belonging to the overall market or if it was assessed as an exogenous constraint   on the  hypothetically  relevant   market  for  branded cow milk  mozzarella.

(453)    In  light  of  the  above  and  given  the  limited  increment,  the   Commission  considers that the Transaction will not substantially modify the market structure and  will  not  remove  a  significant  competitive   constraint   for   branded  cow   milk   mozzarella   in the UK.

(454)    In its assessment of this plausible market,  the  Commission  also considered  the arguments presented in the below section on the overall market, and in particular concerning the absence of significant barriers to entry and expansion and  the  availability  of other suppliers.

(455)    In conclusion and based on  the  information  available  to  the  Commission  and provided by  Parties,  the  Commission  finds that  the  Transaction does  not  raise serious doubts as to its compatibility with the internal market with  regard  to  the  plausible   market  of branded cow milk   mozzarella   in  the UK.

(B) Private label cow milk mozzarella  in the United Kingdom

(456)    For the supply of private label cow milk mozzarella, based on the  Parties’  estimates using downstream  market  share  at retail level as  a  proxy to  estimate  market  shares  at procurement level, (348) their  combined  market  shares  in  volume  terms  in  2018 would  be [30-40]% (Lactalis:  [10-20]%; Nuova Castelli:   [20-30]%).

(457)    While following the  Transaction the  Parties  would  have  moderate  shares  for the supply of private label cow milk mozzarella, the Commission considers that the Transaction does not raise serious doubts as to its  compatibility  with  the  internal  market on the plausible market for  private  label cow  milk  mozzarella  in  the  UK  for  the  reasons  set out below.

(458)    First, the merged entity will continue to face  significant  competitive  pressure  from several other suppliers, which in  2018  accounted  for  more  than […] (i.e.  [50-60]%  of the overall market). The  Commission  notes  that  based  on  the  Parties’  estimates the main alternative supplier of private label cow  milk  mozzarella  in  the  UK  is  Zott  with a market share between [20-30]%;  other  suppliers,  such  as  Spezialitäten- Käserei Wiegert Jäger, Goldsteig  Käsereien  Bayerwald  are  present  with  each having an estimated market share of [5-10]%,  while  Caseificio  Villa,  Capurso, Caseificio Palazzo, Bayerische Milchindustrie, and Granarolo are present  with  each having an estimated market share of[0-5]%. (349) The respondents to the market investigation listed only few companies as their  actual  or  potential  private  label  suppliers  of cow milk   mozzarella,   such  as Zott and Glanbia. (350)

(459)    Second, as explained above, in the  UK,  private  label  covers  approximately [90-100]% of the demand for cow milk mozzarella. Some of the UK customers expressing their  views  indicated  that  they  offer  different  qualities  ranging  from low-tier to top tier private label  mozzarella. (351)  In  addition,  all  UK  customers expressing  their  views  indicated  that  it  is  important  for   a  mozzarella   supplier  to have mozzarella “made in Italy”.352 However,  from  the  explanations  submitted  it  appears that origin criterion likely applies only in relation to certain part of demand commanding higher price. (353) As one customer explained: "Price matters for some customers, origin for others". (354) Furthermore, the majority of UK  customers expressing  their  views  also  submitted  that  mozzarella  “made  in  Italy”  is  either  fully  or largely  substitutable   with  mozzarella   without   specific   origin indication. (355)

(460)    Third, as regards the  alternative  suppliers  of  private  label  cow  milk  mozzarella,  the  list provided  by  the  Parties  indicates  that  there  are  a  number  of  Italian manufacturers  (Caseificio  Villa,  Capurso,  Caseificio  Palazzo,  and   Granarolo) alongside non-Italian manufacturers (e.g. Zott, Spezialitäten-Käserei Wiegert Jäger, Goldsteig Käsereien Bayerwald), that could cater for the differentiated demand  for private  label  cow milk   mozzarella.

(461)    Fourth, the UK customers expressing  their  views  submitted,  however,  that  while  it  may not be easy, it is possible  to  switch  to  a  different  private  label supplier of cow milk mozzarella. (356) As one  UK  retailer  explained:  “there  are  alternative suppliers”. (357)  More  particularly,  half  of  the  UK  customers expressing   views indicated that  they  had  switched  private  label  suppliers  of  cow  milk mozzarella  in the  last  three  years  in  a competitive process. (358)

(462)    Fourth, even though one retailer expressed concerns that there are few alternative suppliers for the supply of mozzarella “made in Italy” :  “Lactalis  and  Nuova Castelli are currently the only 2 viable options in terms of cost, quality  and services offered  to the customer”, (359)  the  Commission  notes  that overall the results  of the market investigation suggest that the market  for private  label  cow  milk mozzarella is competitive and  the  price  is  a  significant  factor  for  determining  the choice of  suppliers  in  tenders. (360)  Furthermore, none  of  the  UK  customers responding to the market investigation indicated that, if the merged entity  increased  prices, they could not quickly switch to an alternative supplier with a  comparable  product  range  and  sufficient quantities. (361)

(463)    Fifth, given that competitive selection process for private label supply is driven by  retailers, the Commission  notes  that  the  majority  of  the  retailers  in  the  UK  expressing their views submitted that they select  their  private  label  suppliers  once  a year or even less than once a year. (362) Furthermore, the results  of  the  market investigation suggest that retailers in the  UK  do  not  commit  to  the  specific  volumes and  generally  have  price  adjustment-mechanisms   in   their   contracts  with  suppliers  of  private  label  cow  milk mozzarella,  which  would   indicate   that   retailers   likely have  a strong  negotiation  position. (363)

(464)    In its assessment of this plausible market,  the  Commission  also considered  the arguments presented in the below section as regards the overall  market,  and  in  particular concerning the absence of  significant  barriers  to  entry  and  expansion  and the  availability  of other suppliers.

(465)    In conclusion and based on  the  information  available  to  the  Commission  and provided by  Parties,  the  Commission  finds that  the  Transaction does  not  raise serious doubts as to its compatibility with the internal market with  regard  to  the  plausible  market of private  label cow milk   mozzarella  in  the   UK.

(C) Overall market for cow mozzarella in the United Kingdom

(466)    Based on the market share data submitted by the Parties and  in  light  of  the methodology described in Section 5.2, the combined Adjusted market shares of the Parties in branded and private label in volume  terms  in  2018  were:  [40-50]% (Lactalis:  [20-30]%; Nuova  Castelli: [10-20]%).

(467)    Overall,  during  the  market  investigation  customers in  the  UK   expressing   their   views were concerned  about  Italian-type  cheeses  including  cow  milk mozzarella. (365)  In contrast, the majority of competitors expressing the views suggested that the Transaction will not have an  effect  on  prices  or  that  the  prices  will  decrease  for  cow milk   mozzarella   in  the UK. (366)

(468)    However, even though the concentration gives rise  to  moderate  combined  market shares of the Parties, the Commission considers that the Transaction does not raise serious doubts for the supply of cow milk mozzarella to retailers in the UK  for  the reasons  set out in  Sections  (A) and (B)  above, and for  the following   reasons.

(469)    First, despite large market shares of the Parties,  after  the  Transaction,  the  merged  entity  will  continue  to  face  significant  competitive  pressure  from  several  private  label suppliers and branded products suppliers,  such  as  Zott,  Valcolatte,  Granarolo  and others.

(470)    Second, the competitors of the Parties are likely to have ability and incentive to sufficiently expand capacity  and  supply larger  volumes  of  cow  milk mozzarella, should  the merged  entity  increase   prices.

(471)    When  market  conditions  are  such  that  rival  firms   have  sufficient  capacity  and  find   it  profitable  to  expand  output  sufficiently,  the   Commission  is   unlikely   to  find   that the merger would  significantly  impede  effective  competition. (367) Conversely, when market  conditions  are  such  that  the  competitors  of the  merged  entity  are  unlikely to increase their  supply significantly  should  prices  increase,  the   merged   entity   may have an incentive to reduce output below the combined  pre-merger  levels  thereby  raising  market prices. (368)

(472)    The Notifying Party has argued that  at  the  EEA  level  the  production  capacity  for  cow  milk mozzarella  is  almost  double than  the  total  EEA  supply. (369)  The Commission was not  able  to  verify  the  estimate  provided  by  the  Parties  in  its market investigation. However, the evidence in  the  file  indicates  that  several competitors,  including  the  manufacturers  with  Italian  production  assets, could profitably expand the output with their current production assets,  while  other  competitors have also indicated their recent and on-going investments in capacity expansion. (370) For example, an Italian  manufacturer,  which  is  already  present  in  the UK market, has submitted  its  capacity  expansion  plans  and  the  intention  to  become “a serious partner in the private label business”. (371) Another  manufacturer  with  Italian production  facilities  also explained  that  they  are  currently  considering expanding the  production  of  their  fresh Italian  cheeses  and  have  set aside investment for this purpose. (372) In  addition,  the  Notifying  Party  suggested  that expanding production capacity for cow milk mozzarella is not associated with high investment   and can be done relatively   quickly. (373)

(473)    Second, the barriers to enter or expand  into  the  UK  national  market  appear  to  be low. The Commission has assessed whether it  would  be  possible  for  alternative suppliers of cow milk mozzarella to enter the UK where they  are  not  active  or  to expand supply if they are already present; or if  such  repositioning  of  the  offering  would entail risks and large sunk costs that would act as  a  disincentive  against such  entry  or expansion.

(474)    While fresh cheese is a good with a short shelf life, the results  of  the  market  investigation suggest that in order to be active in the UK, a  supplier  does  not  necessarily have to own a distribution system and warehouses in the country. The Commission notes that one retailer explained that while having a local presence is important, “it can be a person who speaks English and knows the UK market” (374). This customer further explained that  for  larger  volumes  of private  label  it  “does  not try to reach out to Italian producers directly because of language and distribution barriers which would make difficult to manage the supply and the forecast”. (375) However, for smaller volume supplies  of  other  Italian-type  cheeses,  the  customer works with an agent from Germany. (376) Another customer of  the  Parties  also indicated to receive bids for “made in Italy”  mozzarella  from  several  UK  based agents that have expertise and logistics to supply private  label  products  to customers. (377)    This   is   in   line   with  the  results  of  the  market  investigation  suggesting that large majority of suppliers expressing views fully outsource the distribution of Italian-type cheeses in the UK to a  third-party  service  provider. (378)  In  certain instances, the suppliers submitted  that  they rely  on  distributors, while  in  other  instances they can rely  on  logistics  companies. (379)  Based  on  the  results  of  the  market   investigation,   the   Commission   considers   that   distribution   and   logistics likely would  not  constitute  a  significant  barrier  to  entry  or  expansion  in  the  UK  with  regard  to Italian-type  cheeses. (380)

(475)    Finally, the Commission  found  that  the  Transaction  does  not  raise  serious  doubts  as to its compatibility with  the  internal  market  on  the  plausible  markets  for  branded  cow  milk mozzarella  in  the  UK  as  well  as  private   label  cow  milk   mozzarella   in the UK.

(476)    Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the Transaction does not raise  serious doubts in the  overall  market  for cow milk   mozzarella  in  the  UK.

5.6.2. Buffalo milk mozzarella

(477)    As outlined in the Market Definition section  in  section  4.3.2,  the  market  for the  supply of buffalo milk mozzarella to retailers is a differentiated market across sales channels, where suppliers can compete in branded  and  in  private  label  cheese. Although the presence of suppliers in the same sales channel will be indicative of  closeness of competition between  them,  the  pricing  of  private  label  products  will have  some  effect  on the  pricing  ability  in  the branded  side  of the market.

(478)    Lactalis supplies only branded  buffalo milk mozzarella,  whereas  Nuova  Castelli supplies private label buffalo milk mozzarella in the UK.  Accordingly,  the  Parties' activities in relation to buffalo milk mozzarella in  the  UK  give  rise  to  an  affected  market only if  the  overall market  including  branded  and  private  label  was considered. In light of this, the Commission will assess the likely effects  of  the Transaction  on the overall  market  for  buffalo   milk   mozzarella   in  the UK.

(479)    Based on the market share data submitted by the Parties and  in  light  of  the methodology described in Section 5.2, the combined market shares of the Parties in branded  and   private   label   in   volume   terms   in   2018    were:    [50-60]%  (Lactalis:  [0-5]%; Nuova  Castelli: [40-50]%).

(480)    Although, post-Transaction the Parties will have large combined market shares, the Commission considers that the concentration does not raise serious doubts  for  the  supply  of buffalo   milk   mozzarella   in  the  UK for  the following reasons.

(481)    First, the  increment  brought  by  the  Transaction ([0-5]%)  is  not  significant.  The limited  importance  of  Lactalis   presence  in  the   market  for  buffalo   milk   mozzarella  in the UK as suggested by its  market  share  can be  further  supported  by the  finding that  none  of  the  UK  customers responding   in   the   market  investigation  indicated that Lactalis has the strongest or the next to strongest brand for buffalo milk  mozzarella. (382)

(482)    Second, there are several strong competitors both in branded and in private label segments   already  supplying  the retailers   in  the UK.

(483)    As can be seen from the market structure in the Table provided above, in the UK, branded  buffalo milk mozzarella  covers  a  significant  share  of  demand  (just  a  little  bit below [50-60]%). There are several strong players in  the  branded  segment  with sales exceeding recorded Lactalis sales by over 3 (Laverstok Park) to 8  (Garofalo) times. Notably, Lactalis has only larger  sales  than  La  Contadina,  an  Italian manufacturer  specialised  in  production  of  buffalo milk mozzarella  PDO   with recorded sales  of […] in 2018.

(484)    Third, as regards the  private  label  segment,  Nuova  Castelli  is  likely the  largest supplier of private label  buffalo milk mozzarella.  However,  based  on  the  data provided by the Parties, other important suppliers of private  label  buffalo milk mozzarella are  Garofalo  with  an  estimated  overall market  share  of  [30-40]%, Casaro del re sociera  ([10-20]%), Laverstoke  park ([10-20]%), and Sori ([0-5]%).

(485)    Fourth, the Commission considers that the Parties are not close competitors  for  the supply of buffalo milk mozzarella in the UK.  The  Commission  notes  that  Nuova Castelli   produces   and   trades   private    label   buffalo    milk    mozzarella, (383) whereas Lactalis trades  limited  volumes  under  its  own  brand  Galbani  or  Vallelata. (384) Given the presence  of  several  branded  buffalo milk mozzarella  suppliers  in  the  UK  market, the Commission considers that Lactalis brands  compete  closer  to  other brands,  such as Garofalo,  than  to private  label  buffalo   milk  mozzarella.

(486)    Fifth, based on the data provided by  the  Parties,  Lactalis  trades  buffalo milk mozzarella  manufactured  by  […],  […],  and  […]. (385)  The  Notifying  Party  submits that its contracts with these suppliers, including volumes, are negotiated on a  […]  basis. (386) The Commission notes that  all  listed  suppliers  already  have  access  to  the  UK retailers and their contracts with Lactalis are not  long-term.  Accordingly,  if  following  the  Transaction,  the  merged  entity  increased  prices;  these   companies   could  likely   quickly  increase  their  supplies  to the  UK.

(487)    Sixth, in line with the arguments  set out  in  paragraph  (474),  the  Commission considers that there are no significant entry or expansion barriers to  the  market  for buffalo milk mozzarella  in  the  UK,  in  particular  as  it  is  a  small  and  rather  fragmented market  (see  Table  13)  and  where the  organization  of  distribution  through agents is even easier than for larger volumes. (387) Accordingly, in addition to suppliers that  are  already  active  in  the  UK  market,  also  the  suppliers  of  buffalo milk mozzarella in other EEA countries (388), such as Zanetti (active  e.g.  in  France, Belgium and Spain), Ambrosi (e.g.  France),  could  likely quickly  and  without  incurring  significant   cost enter  the  UK market.

(488)    While overall, during the market investigation  few  customers  in  the  UK  expressing  their views were  concerned  about  Italian-type  cheeses,  no  substantiated concerns were formulated   in  relation  to the  supply  of buffalo   milk  mozzarella. (389)

(489)    Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the Transaction does not raise  serious doubts as to its compatibility with the internal market on the overall market  for  the  supply  of buffalo   milk   mozzarella.

5.6.3. Ricotta

(490)    Lactalis and Nuova Castelli are  active  in  the  market  for ricotta in  the  United Kingdom.  Both  Parties  manufacture   and sell  branded and private  label.

(A) Branded ricotta in the United Kingdom

(491)    Based on  the  Commission’s  Adjusted  market  shares  methodology,  the  Parties appear to be the only suppliers currently selling  branded  ricotta in  the  United Kingdom.

(492)    However, this third party data, as explained in Section 5.2, does not always  specify  small sales and also does not track  all  outlets  in  the  retail  channel.  Therefore,  it  cannot be excluded that this data source does not record other  smaller  suppliers  of ricotta  in  the UK.

(493)    Despite the large combined  market  shares  as  recorded,  first,  Lactalis  had  limited  sales  of  branded  ricotta   in   2018  ([…]).  These   sales  have   decreased  in  the   last 3 years (e.g. Lactalis sales in 2016 were […] and […] in 2017) and in 2018 they amounted  to less  than […].

(494)    Second, Nuova Castelli’s sales of branded ricotta in the United Kingdom were very limited in 2018 ([…] with amounted to  approximately  […]);  as  a  result  the  panel  data used by the Commission to conduct  the  analysis  of  the  market  shares  (see Section 5.2.2 above) indicates  that  Nuova  Castelli has no  sales of branded ricotta in  the  United  Kingdom.  Therefore, it  is  likely that  this   methodology   results   in   the same  outcome  for  other  small suppliers.

(495)    Third,  Nuova  Castelli’s   sales   have   remained   stable   in   the   last  three  years  ([…] in 2016 and 2017), thus Nuova Castelli’s  is  not  capturing  Lactalis’  lost sales. Therefore, it is likely that there are additional  suppliers  of  branded  ricotta  in  the  United Kingdom that have been exercising competitive pressure on Lactalis pre- Transaction  and will   continue   to do so vis-a-vis   the merged  entity.

(496)    In its assessment of this plausible market the Commission has also considered in its assessment the arguments presented in  the  below  section  as  regards  the  overall market, and in particular concerning the absence of significant barriers to entry and expansion  and the  availability  of other  actual  and potential  suppliers.

(497)    In conclusion, based  on  the  information  available  to  the  Commission  and  provided  by Parties, the Commission finds  that  the  Transaction does not  raise  serious  doubts  as to its  compatibility  with  the  internal  market  with  regard  to  the  plausible  market  of branded  ricotta  in  the  United Kingdom.

(B) Private label ricotta in the United Kingdom

(498)    According to the  market  shares  provided  by the  Notifying  Party,  the  Parties  appear to be  the  only  suppliers  currently  selling  private  label  ricotta in   the   United Kingdom.

(499)    However, first, the Notifying  Party  believes  that  other  players are  also active  in private label supply of ricotta in the United Kingdom,  such  as  Caseificio  Elda  and  Latte  Carso. (390)

(500)    Moreover, one  customer identified Eurilait  as  a  supplier  of  private  label  ricotta  in  the United Kingdom. (391) Thus,  the  market  structure  and  market  shares  proposed  by the  Notifying  Party are likely  to be overstated.

(501)    Second, Nuova Castelli had moderate sales of private label ricotta  in  2018  ([…]), which amounted to less than  […]  in  2018,  and  Lactalis’  sales  of  private  label ricotta in  the   United   Kingdom  were  limited   ([…])  amounting   to  less   than  […] in 2018.

(502)    Third, with regard to the  ability  of  customers  to  switch  suppliers  of ricotta,  half  of  the responsive customers that expressed a view  indicated  that  they  could  quickly  switch to  an  alternative  supplier  of  private  label  ricotta  with  a  comparable  range  and  sufficient  quantities. (392)

(503)    In its assessment of this plausible market the Commission has also considered in its assessment the arguments presented in  the  below  section  as  regards  the  overall market, and in particular concerning the absence of significant barriers to entry and expansion and the  availability  of  other  actual  and  potential  suppliers  that  also  apply to the  assessment  of private  label ricotta.

(504)    In conclusion, based  on  the  information  available  to  the  Commission  and  provided  by Parties, the Commission finds  that  the  Transaction does not  raise  serious  doubts  as to its  compatibility  with  the  internal  market  with  regard  to  the  plausible  market  of private  label  ricotta  in  the  United Kingdom.

(C) Overall market for ricotta in the United Kingdom

(505)    Based on the Commission’s methodology, Adjusted market shares  for  the  overall market  for  ricotta  in  the  United  Kingdom  are as follows.

(506)    The Transaction results in an affected market because of Nuova  Castelli’s  moderate sales of private label products in the United Kingdom. Lactalis has a more limited presence in the overall market  for  ricotta.  However,  the  Commission  considers  that the  Transaction  does not  raise  serious  doubts  for  the following reasons.

(507)    First, as discussed in paragraphs (499)  and  (500)  above,  although  the  Notifying Party’s market shares indicate that Lactalis and Nuova Castelli cover the market for private label supply of ricotta (394), the  Notifying  Party  submits  that  other  players  are also active in private label  supply of  ricotta in  the  United  Kingdom,  such  as Caseificio  Elda  and  Latte  Carso,  and  the  market  investigation  confirmed  the  presence of  another  supplier  of  private  label  ricotta in  the  United  Kingdom,  Eurilait.

(508)    Second, there are several producers of other fresh cheeses such as Granarolo and Valcolatte that currently sell their products  in  the  United  Kingdom.  These  suppliers  also sell ricotta in other EU countries (e.g. France and Italy). If the Parties were to  increase prices,  Granarolo,  Valcolatte  and  other  producers  of  ricotta currently  active in other EU countries  could  potentially  enter  the  market  in  the  United  Kingdom, in particular given that, as explained in paragraph (474), the market investigation indicates that to be active in the United Kingdom a supplier does not necessarily have to own a distribution system and warehouses in  the  country.  The  finding for ricotta is particularly informed  by  the  circumstance  that  even  limited deliveries of the product by these suppliers would result in an important decrease in  shares  for  the Parties combined.

(509)    Third, with regard to the  ability  of  customers  to  switch  suppliers  of ricotta,  half  of  the responsive customers indicated that the switch  to  an  alternative  supplier  was possible for private  label  ricotta. (395)  In  addition,  the  majority  of  responsive competitors and customers that expressed a view indicated  that  it  was  possible  and even easy  to  switch  suppliers  of  ricotta. (396)  Moreover,  a  British  customer  switched to Eurilait   in  the last  three  years in  the United  Kingdom.  (397)

(510)    Fourth, concerning barriers  to  entry  and  expansion,  different  from other  fresh  cheese products discussed above for which access to milk has been assessed as a potential barrier to entry, ricotta is produced from a by-product of other cheese production.  In  particular,  as  explained  by  the  Notifying  Party,  ricotta is  manufactured by heating whey to 80° C.  The  market  investigation  confirmed  that  ricotta is by-product of  whey, (398)  which  is  a  liquid  derived  from  the  production  of soft and fresh cheese (e.g. mozzarella) (399). The Parties use their leftovers of whey to produce ricotta as well as milk powder. Nuova  Castelli also  sells  part of its  whey to third  parties.

(511)    Moreover, as discussed  in  paragraphs  (473) and  (474) above,  the  barriers  to  enter or expand into the UK national market  appear to  be low  and,  based on the results of the  market  investigation,  the  Commission  considers  that  distribution  and   logistics likely would not constitute a significant barrier to entry or expansion in the United Kingdom  with  regard  to Italian-type  cheeses.

(512)    Furthermore, the majority of customers that responded to the market investigation indicated that there were not significant barriers to entry  or  expansion  for  ricotta  in terms  of costs and time. (400)

(513)    Fifth, during  the  market  investigation  customers in  the  United  Kingdom  expressing their views  were  concerned  about  the  impact  of  the  concentration  on  competition for the supply of Italian-type cheeses, which would include ricotta. (401) However, a competitor indicated to the contrary that  prices  for ricotta would  decrease  in  the United   Kingdom  following  the Transaction. (402)

(514)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to  its  compatibility  with  the  internal  market  on  the  plausible  markets  for  private label ricotta  in the  UK as well  as branded  ricotta  in the  UK.

(515)    In conclusion, in light of the above and based on the information available to the Commission  and  provided  by  Parties,  the  Commission  considers  that   the Transaction does not raise serious doubts as to its  compatibility  with  the  internal  market  on the  overall  market  for  ricotta  in  the United Kingdom.

5.6.4. Mascarpone

(516)    Both Lactalis and  Nuova  Castelli  supply  branded  and  private  label  mascarpone  in the UK. In light of this, the  Commission  will  assess  the  likely effects  of  the Transaction on each of the branded and private label segments, as  well  as  on the overall  market  for  mascarpone  in  the UK.

(517)    As outlined in the Market Definition section  in  section  4.3.2,  the  market  for the  supply of mascarpone to retailers is a  differentiated  market  across  sales  channels, where suppliers can compete in branded and in private label cheese. Although the presence of suppliers in the same sales channel will be indicative of closeness of competition between  them,  the  pricing  of  private  label  products  will  have  some effect  on the  pricing  ability  in  the branded  side  of the market.

(A) Branded mascarpone in the United Kingdom

(518)    First, the Commission notes  that  the  third  party  data  relied  on  by  the  Commission  to establish the market  shares  of the  Parties  and  their  competitors  does  not  indicate an overlap  for  the supply  of branded mascarpone.

(519)    An overlap between the Parties activities  was  only  identified because  actual  supply data from the  Parties  suggested  an  actual  delivery  of  very  minor quantities  by Nuova Castelli to the UK in 2018 ([…]) of  branded  mascarpone. (403)  Accordingly,  based on the market share data submitted  by  the  Parties,  if  potentially  relevant  segment for branded  mascarpone  was  considered,  the  combined  market  shares  of the     Parties    would     be     [150-160]%     (Lactalis:     [130-140]%;     Nuova  Castelli  [20-30]%). (404)

(520)    However, the Commission notes that third party data,  as  explained  in  Section  5.2, does not specify small sales and does  not  track  all  outlets  in  the  retail  channel.  In light of this  and  the  calculated  figure  by  the  Parties  which  exceeds  100%,  the market shares  of  the  Parties  are  likely overestimated. In  particular,  similarly  to Nuova Castelli, other  suppliers,  which  constitute  a  competitive  pressure  on  the Parties, are likely not recorded by the same data sources that do not record Nuova Castelli. There are no other suppliers of branded mascarpone recorded by the  third- party data.

(521)    Moreover, the very low increment to the market shares, which corresponds, as  explained above, to de minimis sales of […] in the entire year  2018,  further corroborates the very limited importance of Nuova Castelli as a constraint in  the  plausible   branded product market.

(522)    The Commission also observes that the branded segment in the overall market for mascarpone   has   less   than   [5-10]%   share,   which   would   indicate   that   the   main competitive constraint  in  the  market  comes  from private  label  mascarpone, irrespective of whether it belongs to  the  same market  or  it  is  assessed  as  a  constraint from outside the market. For example,  some  retailers  in  the  UK  do  not  even carry branded products and cover the whole demand with private label Italian cheese. (405)

(523)    In light of the above, the Commission considers that the  Transaction will  not substantially  modify  the  market  structure and  will  not  remove  a  significant competitive   constraint   for branded  mascarpone  in  the UK.

(524)    In its assessment of this plausible market  the  Commission  also considered  the arguments presented in the below section as regards the overall  market,  and  in  particular concerning the absence of  significant  barriers  to  entry  and  expansion,  as well as the Nuova Castelli’s competitive position limited to  trading  activity,  other available   suppliers,   and the impact  of the  Transaction.

(525)    In conclusion and based on  the  information  available  to  the  Commission  and provided by  Parties,  the  Commission  finds that  the  Transaction does  not  raise serious doubts as to its compatibility with the internal market with  regard  to  the  plausible   market  of branded mascarpone  in  the UK.

(B) Private label mascarpone in the United Kingdom

(526)    For the supply of private label mascarpone, based on the Parties’ estimates using downstream market share at retail level as a proxy to estimate market shares at procurement level (406), their combined  market  shares  in  volume  terms  in  2018  would  be [50-60]% (Lactalis:  [20-30]%; Nuova Castelli:  [30-40]%).

(527)    The Commission considers that despite large market shares of the Parties post- Transaction, it is not  likely  that  the  Transaction  will  give  rise  to  serious  doubts  for  the  following  reasons.

(528)    First, as explained above, in the UK, private label covers almost all the demand for mascarpone ([90-100]%).  While  the  Parties  post-Transaction  will  likely be  the leading  suppliers  of  private  label  mascarpone,  the  merged  entity  will  continue   to face significant competitive pressure  from other  private  label  suppliers,  which, according to the third party data, accounted for more than  […]  (or  for over [40-50]% of the overall demand). The Parties estimate that the leading  supplier  of  private label mascarpone in the  UK  is  Sterilgarda  with  a  market  share  of [60-70]%, (407)   Latte   Montagna   Alto   Adige   ([10-20]%),    and    Lattebusche- Latteria  ([0-5]%). (408)

(529)    Second, while  one  UK  customer indicated  that, in  case  of  a  price  increase following  the  Transaction,  it  could  not  quickly   switch   to  an  alternative   supplier with  a  comparable  product range  and  sufficient  volumes  of  private  label mascarpone, the same customer also submitted that  it  is  possible to  switch  to  a different  supplier  of  mascarpone. (409)  In  addition,  the   finding   that   switching   is possible can also be supported by the response of  another  UK  customer that indicated to have switched a private label supplier in the  last three  years  in  a competitive  process. (410)

(530)    In its assessment of this plausible market,  the  Commission  also considered  the arguments presented in the below section as regards the overall  market,  and  in  particular concerning the absence of  significant  barriers  to  entry  and  expansion,  as well as the Nuova Castelli’s competitive position limited to trading activity,  and  the  impact  of the Transaction.

(531)    In conclusion and based on  the  information  available  to  the  Commission  and provided by  Parties,  the  Commission  finds that  the  Transaction does  not  raise serious doubts as to its compatibility with the internal market with  regard  to  the  plausible   market  of branded mascarpone  in  the UK.

(C) Overall market for mascarpone in the United Kingdom

(532)    As outlined by the market shares,  the  overlap  between  the  Parties  in mascarpone  in the UK occurs in the segment for the supply of private label products. Based on the market share data submitted  by  the  Parties  and  in  light  of  the  methodology  described in Section 5.2, the combined market shares of the Parties in branded  and private label in volume terms in 2018 were: [60-70]% (Lactalis: [20-30]%; Nuova Castelli: [30-40]%).

(533)    However,  even  though  the  concentration gives  rise  to  large  combined  market  shares of the Parties, the Commission considers that the Transaction does  not  raise serious doubts for the supply of mascarpone to retailers in the UK for the following reasons.

(534)    First, following the Transaction, the merged entity will continue to face significant  competitive pressure from  several  private  label  suppliers,  which,  based  on  2018  data, accounted  for [40-50]% of the overall  demand  for  mascarpone.

(535)    Second,  none  of  the  customers responding to  the   Commission's   market investigation suggested that it was not possible to switch to different supplier of mascarpone. (412) When asked if there are any significant barriers to the  entry  or  expansion for mascarpone in  terms  of  costs  and  time,  none  of the  customers  from the  UK indicated  that  there  were any barriers. (413)

(536)    Third, as outlined above Nuova Castelli does  not  produce  mascarpone  but  only  trades mascarpone produced  by  a  third-party  manufacturer  […],  which  indicates  that the position of Nuova Castelli on  the  UK  market  may  easily  change  as  it depends  on  whether  Nuova  Castelli’s  supplier  will  be  willing  to  extend the  contract.  […] (See paragraph (363)).

(537)    Fourth, in line with the arguments set out  in  paragraph  (474),  the  Commission considers that there are no significant entry or expansion barriers to the market for mascarpone in the UK, in particular  as  it  is  a  small  market  (see  Table  15)  and  where the organization of distribution  through  agents  is  even  easier  for  smaller  than for  larger volumes (414).

(538)    Accordingly, given that  the  main competitive  interaction  is  in  the  private  label  segment for the supply of mascarpone and that  the  entry  into  private  label  segment does not entail risk comparable to the entry into branded  segment,  does  not  incur  brand development  cost,  the  suppliers  of  mascarpone  in  other  EEA  countries (415), such  as  Granarolo (active  e.g.  in  France,  Portugal,  the   Netherlands),   Ambrosi (e.g. France),  could  likely quickly  and  without  incurring   significant   cost  enter  the UK  market.  The  finding  for mascarpone  is  particularly  informed  by   the   circumstance that even  limited  deliveries  of  the  product  by  these  suppliers  would result  in an important  decrease in  shares  for  the  Parties.

(539)    Fifth, while overall, during the  market  investigation  few  customers in  the  UK expressing their views were concerned about Italian-type cheeses, no substantiated concerns  were formulated   in  relation  to the  supply  of mascarpone. (416)

(540)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market on the plausible markets for branded mascarpone  in  the UK  as well  as private  label  mascarpone  in  the UK.

(541)    Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the Transaction does not  raise  serious doubts as to its compatibility with the internal market on the overall market of mascarpone  in  the UK.

5.6.5. Gorgonzola

(542)    Lactalis supplies branded Gorgonzola to retailers in the United  Kingdom,  whereas  Nuova Castelli supplies only private label Gorgonzola to  retailers  in  the  United Kingdom. The  Parties’  activities  in  relation  to  Gorgonzola  in  the  United  Kingdom give rise to an affected market  only  if  the  overall  market  including  branded  and  private  label  was considered.

(A) Overall market for Gorgonzola in the United Kingdom

(543)    Based on the market share data submitted by the Parties and  in  light  of  the methodology described in Section 5.2, the combined Adjusted market shares of the Parties in branded and private label in volume  terms  in  2018  were  [50-60]% (Lactalis:  [40-50]%, Nuova Castelli:  [10-20]%).

(544)    Although, following the Transaction the  Parties  will  have  large  combined  market shares, the Commission  considers  that  the  concentration does  not  raise serious doubts  for the  supply  of Gorgonzola   in  the  UK for the  following reasons.

(545)    First, the private label Gorgonzola has a large share in the overall market in the UK ([50-60]%) with several strong suppliers,  which  exerts  a  competitive  constraint  on  the  branded label suppliers.

(546)    As regards the private label supply of Gorgonzola, the Commission notes that  other private label suppliers put on the market more than double the volumes supplied by Nuova Castelli. Based on the Parties data, the main competitors in the private label segment are Igor ([50-60]% of the overall market), Arrigoni Battista ([10-20]%), Acquistapace  ([5-10]%), and Emilio   Mauri ([0-5]%).

(547)    Second, the Commission  notes  that  the  Parties  are  active  in  different  segments  of  the  market,  which  would  indicate  that  they  are  not  close  competitors.   While Lactalis is the leading supplier of branded Gorgonzola it competes closer to other  suppliers of branded Gorgonzola products than  for the  supply of  private  label cheese.

(548)    Third, the production of Gorgonzola is regulated by quotas of membership in the consortium and consortium controls the production levels. (418) The  Notifying  Party explains that the production of Gorgonzola in Italy and the exports  of  Gorgonzola  outside of Italy are largely dominated by the market leader Igor, which accounts for [40-50]% of the total production of Gorgonzola and [60-70]% of the total exports outside of Italy.  By  comparison,  Lactalis  and  Nuova  Castelli  respectively  account  for [10-20]% and [0-5]% of the total production of Gorgonzola. Likewise, they respectively account for only [10-20]% and [0-5]% of the total exports outside of Italy. (419)

(549)    As a consequence, the Parties account for a  limited  part  of  the  production  and  exports outside of Italy, so that any retailer located in the UK can  find  alternative  sources  for  the supply  of Gorgonzola.

(550)    Fourth, in line with the arguments set out  in  paragraph  (474),  the  Commission considers that there are no significant entry or expansion barriers to the market for Gorgonzola in the UK,  in  particular  as  it  is  a  small  market  and  where the organization of distribution through agents is even easier for smaller than for larger volumes (420). In particular, given that entry  into  private  label segment  does  not  entail  risk comparable to the entry into branded  segment  because  the  supplier  would  not  incur  brand  development  costs,  the  suppliers  of  Gorgonzola   in   other   EEA countries, such as Vivaldi and Ambrosi  (both  active  e.g.  in  France)  could  likely quickly and without incurring significant cost enter the UK market. The finding for Gorgonzola  is  particularly  informed   by   the   circumstance   that   even   limited deliveries of the product by these suppliers would result in an important decrease in  shares  for  the Parties combined.

(551)    While overall, during the market investigation  few  customers  in  the  UK  expressing  their views were concerned about Italian-type cheeses, they have not raised any substantiated concerns  in  relation  to  the  supply  of  Gorgonzola. (421) In  addition,   a third party stated that the Transaction “will not have a negative impact on […] the overall market of Gorgonzola.” (422)

(552)    Based on the above considerations and in the light of the results of the market investigation,  the  Commission  considers  that the  concentration   does   not   raise serious doubts as to its  compatibility  with  the  internal  market  on the  overall market  for  Gorgonzola   in  the UK.

5.6.6. Italian-type hard cheese

(553)    Lactalis supplies only branded Italian-type hard cheeses, whereas Nuova  Castelli supplies mainly private label and to some limited  extent  branded  Italian-type  hard cheeses to retailers in  the  United  Kingdom (the UK).  In  light  of  this,  the Commission will  assess  the  likely effects  of  the  Transaction on  the  branded  segment,  as well  as on the overall  market  for  Italian-type   hard  cheese  in  the UK.

(A)  Branded Italian-type hard cheeses in the United Kingdom

(554)    First, if  only  the  segment  of  branded  Italian-type  hard  cheese  was  considered, where the only overlap is, based on the Commission’s Adjusted market shares methodology, the Parties’  combined  market  shares  in  volume  terms  in  2018  would  be [30-40]% (Lactalis:  [5-10]%;  Nuova  Castelli:  [20-30]%). (423)  The  low  increment of [5-10]% to the market shares  represents  minimal  recorded  sales  of  Lactalis  of […] in the entire year 2018 and also indicates low significance of Lactalis as a  competitive   constraint  in the  plausible   branded product  market.

(555)    Second, following the Transaction the Parties will continue to  face  competitive constraints from several credible competitors.  Based  on  the  third-party  data  (see Table 17), there are several  other  suppliers  of  branded  Italian-type  hard  cheese  in  the  UK:  Napolina,  Colla,  Trentin  among  others.  While  these  suppliers  do  not  have a large presence in the market (market shares of each of them is below [0-5]%), the recorded volumes of Lactalis are nonetheless  the  smallest  ([…]  per  year,  less  than half compared to other Italian-type cheese manufacturers  Trentin  and  Colla).  This  would further support the finding that Lactalis has a very limited importance  as  a constraint   in  the branded  product  segment,  as well  as in  the overall market.

(556)    Third,  competition  for Italian-type  hard  cheeses,  which   encompass   products covered by a  Protected  Denomination  of Origin,  is  less  affected  by  brand  presence in view of  the  predominant  role carried  by  such  denominations  (Parmigiano  Reggiano, Grana Padano). Therefore, it makes the assessment of a  market  only consisting  of  branded  product  much  less significant  in   this   context.  In  particular, the  Parties  submitted  that  brands  carry  little  weight  as  the   selling  point  is   mostly  the PDO branding. The presence of the PDO logos on a cheese wheel or bag of Parmigiano Reggiano ensures and indicates to the consumer  that  this  cheese  is produced,  and  the  milk collected,  exclusively  in  the  PDO  area,   delivering  recognition and quality perception expected from a brand. In line with this  one competitor also explained: “The PDO brands enjoy high notoriety  that  it  takes away “space” from private brands and indirectly attracts attention of private labels”. (424)

(557)    In  light  of  the  above  and  in  particular  given  the  very  limited  activities  of  Lactalis, the Commission  considers  that  the  Transaction will  not  substantially  modify  the market  structure and  will  not  remove  a  significant  competitive   constraint   for branded  Italian-type- hard  cheese  in the UK.

(558)    In its assessment of this plausible market,  the  Commission  also considered  the arguments presented in the below section as regards the overall  market,  and  in  particular  concerning  the  market  structure, availability of  alternative   suppliers, absence of significant barriers to entry and expansion, and the  limited  competitive  position  of Lactalis.

(559)    In conclusion and based on  the  information  available  to  the  Commission  and provided by  Parties,  the  Commission  finds that  the  Transaction does  not  raise serious doubts as to its compatibility with the internal market with  regard  to  the  plausible   market  of branded Italian-type  hard cheeses  in  the UK.

(B) Overall market for Italian-type hard cheese in the United Kingdom

(560)    On the overall market for Italian-type hard cheese in the UK,  based  on the  market share data submitted by the Parties and in  light  of  the  methodology  described  in Section 5.2, the combined market shares  of  the  Parties  in  volume  terms  in  2018  were: [40-50]% (Lactalis: [0-5]%; Nuova Castelli: [40-50]%), with a very limited increment  of [0-5]%.

(561)    Although,  post-Transaction  the  Parties   will   have   moderate   combined   market shares, the Commission considers that  the  Transaction  does  not  raise  serious doubts for  the supply  of Italian-type   hard cheese  in  the UK for  the following  reasons.

(562)    First, as the  market  shares  indicate  (Table 17),  Lactalis  has  only  very  limited activities in the UK for the supply of  Italian-type  hard  cheeses.  Therefore, the increment brought by the Transaction  ([0-5]%)  is  negligible  and  would  likely  not  affect  the  market structure.

(563)    Second, the market structure for the supply of Italian-type hard cheeses in the UK suggests  that  the  main competitive  constraints   come   from   the   private   label segment, which has a  [90-100]%  share  of the  overall  market.  The  Parties  activities do not overlap in this segment. Furthermore, even though Nuova Castelli  is  a  big  supplier  of  private  label  products  (estimated  market  share  of  [40-50]%),  there  are other important and viable suppliers  of private  label  products  covering  [50-60]%  of the overall demand. Based on the Parties data, the other  suppliers  are  Consorzio  Virgilio     [20-30]%;    Colla:    [10-20]%;       Latteria    Sociale    Mantova:  [10-20]%; Parmareggio   [0-5]%; and Agriform:  [0-5]%.

(564)    Third, Lactalis depends on  the  supply  from  other  manufacturers,  such  as  […]  or […], for its trading activity of Italian-type hard cheeses. (426)  The  Notifying  Party  explained that it does not have any  written  agreement  or  volume  commitment  for buying Italian-type hard cheeses from its suppliers and relies on a long-term partnership. (427)

(565)    Fourth, the Commission notes  that  Lactalis  traded  volumes  of  Italian-type  hard cheeses in the UK are very small and decreased by [20-30]% over the last three years. (428) The Commission  also  notes  that,  for  example,  […]  is  already  present  in  the UK, and could therefore expand its presence with the retailers at the expense of Lactalis.

(566)    Fifth,  with  reference  to  the  limited  quantities  supplied  by  Lactalis  as  a  trader  of these products in the UK, there  exist  several  other  competitors  who  compete  not  only in the trading, but  also as  producers  of  PDO  cheeses  within  Italian  hard  cheeses because they either have quotas in consortia  (Grana  Padano)  or obtain milk from  consortia (Parmigiano  Reggiano).  The   Parties  do  not  overlap  in  this  respect, as Lactalis is not active in the production of PDO cheese  and  Nuova  Castelli  has limited overall  shares  of  production  in  relation  to  PDO  cheeses.  Accordingly,  also  in  view  of this,  Lactalis   and Nuova  Castelli  are not close competitors.

(567)    Sixth, different from other Italian-type cheeses, Lactalis is not recognised as  an  important player with  respect  to  Italian-type  hard  cheese.  No  customers  from  the UK  or  competitors responding to  the  market  investigation  mentioned   Lactalis among main or alternative suppliers of Italian-type hard cheese in the  UK. (429)  Competitors  responding to the  market  investigation  mentioned  Nuova   Castelli, Zanetti,  Colla  and  Dalter, Cascine  Emiliane. (430)  The  Commission  notes  that  the internal document of the  Notifying  Party  also  suggests  that  Lactalis  does  not  exert  an effective competitive constraint on the market for Italian-type hard cheese. For example, Lactalis in one of the presentations considers: "Out of Italy the most  important category is Parmesan where Galbani has low market share due to its limited competitiveness in terms of Price". (431)

(568)    Seventh, the  Commission  considers  that  it  cannot  be  excluded  that   companies active in  other  national  markets  could  potentially  expand  their  activities  in  the  UK.  In this regard,  the  Parties  submitted  that  competitors  in  Italian-type  hard  cheese  could easily  expand  and  gain  market  shares  in  national  markets,  in  particular referring  to  companies  such  as  Zanetti,  Ambrosi,  Colla, Parmareggio. (432) The majority  of  all  customers expressing their  views  in  the  market   investigation suggested  that  there  are  no  significant  entry  or  expansion  barriers  in  terms  of   cost and  time. (433) The  Commission  notes  that  in  the   market  investigation   a  third-party has also indicated that in recent  years  there  indeed  have  been  several  new  entries  into the national markets of companies  who  previously  only  had  been  active  in Italy. (434)

(569)    Eighth, while  during  the  market  investigation  few  customers in  the  UK  expressing their views were overall concerned about Italian-type cheeses, no  substantiated concerns were formulated in relation to the supply of Italian-type  hard  cheese. (435)  Further, one UK customer explained that  it  does  not expect the  Transaction to  have any impact in relation to the supply of Italian-type hard cheese: “However, Lactalis have a limited presence in the Italian Hard Cheese market, so one would anticipate there being only marginal impact on this area of Italian cheese sales and most this would maintain it's existing framework.” (436)

(570)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market on the plausible market for branded Italian-type  hard cheeses  in  the UK.

(571)    Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the Transaction does not raise  serious doubts as to its compatibility with the internal market on the overall market for Italian-type  hard cheeses.

5.7. Germany

(572)    Based on the market share data submitted by the Parties  and  in  light  of  the methodology used (see Section 5.2), the Transaction gives rise to the following horizontally  affected plausible   markets   in   Germany:   Buffalo   milk   mozzarella (Section  5.7.1); ricotta  (Section  5.7.2) and mascarpone  (Section 5.7.3).

5.7.1. Buffalo milk mozzarella

(573)    Lactalis supplies only branded  buffalo milk mozzarella,  whereas  Nuova  Castelli supplies  branded  and private  label  buffalo   milk   mozzarella   in Germany.

(A) Branded buffalo milk mozzarella in  Germany

(574)    For branded buffalo milk mozzarella, following  the  Commission’s  methodology described  in  Section   5.2,   the   Adjusted   combined   market   share   of  the   Parties  in 2018 in Germany was [30-40]% (in  volume),  with  a  moderate  increment  of Lactalis’ market share of [5-10]% due to Nuova  Castelli’s  moderate  brand presence. (437)

(575)    First, Nuova Castelli had moderate sales of branded  buffalo milk mozzarella  in Germany in 2018 ([…]) and thus does not enjoy strong brand presence. The Transaction  will  bring  a moderate  increment   to Lactalis’   market  share  of [5-10]%.

(576)    Second, after the Transaction, the merged entity will continue to face significant competitive pressure from  the  strongest  competitor  to  Lactalis,  Sori.  According  to  the data provided by the  Parties  and  based  on  the  Commission’s  analysis  (see Section 5.2),  in  2018  Sori represented  a  stronger  competitive  constraint than Nuova Castelli with regard to branded buffalo milk mozzarella in Germany. Sori’s sales of branded  buffalo milk mozzarella  were  significantly  higher than  Nuova   Castelli’s  sales and accounted  for  [30-40]%  of  the  overall  market  of buffalo  milk  mozzarella  in  Germany  (see Table  18 below).

(577)    Third, the merged entity  will  also continue  to  face  competitive  constraints  from several smaller suppliers of branded buffalo milk mozzarella that will remain  in  the German market post-Transaction. These suppliers accounted for [10-20]% of  the  overall market  for buffalo milk mozzarella  in  Germany  in  2018  (see  Table  18 below).

(578)    In its assessment of this plausible market the Commission has also considered the arguments presented in the below section as regards the overall  market,  and  in  particular concerning the availability of other suppliers and the lack  of  closeness  between the Parties that also apply to the assessment of branded buffalo milk mozzarella.

(579)    In conclusion, based  on  the  information  available  to  the  Commission  and  provided  by Parties, the Commission finds  that  the  Transaction does not  raise  serious  doubts  as to its  compatibility  with  the  internal  market  with  regard  to  the  plausible  market  of branded  buffalo   milk   mozzarella  in Germany.

(B) Overall market of buffalo milk mozzarella in Germany

(580)    Based on the market share data submitted by the Parties and  in  light  of  the methodology described in Section 5.2, the combined Adjusted market shares of the Parties in branded and private  label  buffalo milk mozzarella  in  Germany  in  2018  were: [20-30]% (in  volume,   Lactalis:  [20-30]%; Nuova Castelli:  [0-5]%).

(581)    The Transaction results in an affected market  because  of Lactalis’  market  presence with branded products, with brands such as Galbani. Nuova  Castelli  has  a  more limited presence in the  overall market  for buffalo milk mozzarella  in  Germany, bringing  a moderate  increment   of [0-5]% to Lactalis’   market  share .

(582)    Beside the considerations concerning the competitive landscape and shares  of  the  market for buffalo milk mozzarella in Germany, the Commission considers that the Transaction  does not raise  serious  doubts  for the  following  reasons.

(583)    First, the merged entity will also  continue  to  face  competitive  constraints  from  Sori  and several branded and in private label competitors that already supply retailers in Germany. These suppliers  accounted  for [70-80]%  of  the  overall market  for  branded buffalo   milk   mozzarella  in  Germany  in  2018 (see Table  18 above).

(584)    Second, the Commission considers that the Parties are not close competitors for the supply of buffalo milk mozzarella in Germany. The Commission notes  that  Nuova Castelli produces  and  trades  private  label  buffalo milk mozzarella. (439)  However, Lactalis does not  manufacture  buffalo milk mozzarella  but  merely  trades  under  its own brand.

(585)    Third, based on the data provided by the  Parties,  Lactalis  trades  buffalo milk  mozzarella manufactured by third  parties,  including  […]. (440)  The  Notifying  Party submits  that  its  contracts  with  these  suppliers,  including  volumes,  are  negotiated  on  a yearly basis. (441) The Commission notes that […] already has access  to  German  retailers and its contract with Lactalis is not  long-term.  Accordingly,  if  post-  Transaction, the merged entity increased prices, […] could  likely  quickly  increase supplies  to Germany.

(586)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal  market  on  the  plausible  market  for  branded buffalo   milk   mozzarella   in Germany.

(587)    Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the Transaction does not raise  serious doubts as to its compatibility with the internal market  on  the  overall  market  for  buffalo   milk   mozzarella   in Germany.

5.7.2. Ricotta

(588)    Lactalis and Nuova Castelli are active in the market for  ricotta  in  Germany.  Both  Parties  sell  branded ricotta  but  only  Nuova  Castelli  also  sells  private  label ricotta.

(A) Branded ricotta in Germany

(589)    For branded ricotta, the combined Adjusted market share of the Parties in 2018 in Germany  was  [70-80]%  (in  volume),  with  a  moderate  increment  of  Nuova Castelli’s market share of [5-10]% in view of Nuova Castelli’s moderate brand presence. (442)

(590)    First, Nuova Castelli had moderate sales of  branded  ricotta in  Germany  in  2018 ([…]) and thus does not enjoy strong brand presence. The Transaction will bring a moderate  increment   of [5-10]% to Lactalis’   market share.

(591)    Second, after the Transaction, the merged entity will continue to face  significant competitive  pressure  from  the  strongest  competitor   to  Lactalis,   Trentin.  According to the data provided by the Parties and based on the  Commission’s  analysis  (see  Section 5.2), in 2018 Trentin represented a  stronger  competitive  constraint  than  Nuova Castelli with regard to  branded  ricotta in  Germany.  Trentin’s  sales  of  branded ricotta were  significantly  higher  than  Nuova  Castelli’s  sales  and  accounted  for  [5-10]% of the  overall  ricotta  market  in Germany  (see Table  19 below).

(592)    Third,  the  merged  entity  will  also continue   to  face   significant   competitive  constraints  from two  other  branded  suppliers:  Goldsteig  and  Bustaffa  which   in 2018 had combined sales of branded  ricotta comparable  to  those  recorded  for Nuova Castelli (see  Table  19  below).  Moreover,  several  additional smaller  suppliers of branded ricotta will  remain  in  the  German  market  post-Transaction. These suppliers accounted  for  [0-5]%  of  the  overall  market  for  ricotta  in  Germany in  2018 (see Table  19 below).

(593)    Fourth, with regard to the ability of customers to switch  suppliers  of  ricotta,  the majority of customers that  responded  to  the  market  investigation  considered  they could not quickly switch to an alternative supplier of branded  ricotta with  a comparable range  and  sufficient  quantities; (443) however,  the  majority  of  competitors and customers that expressed a view indicated that it was possible and even easy to switch  suppliers   of ricotta. (444)

(594)    In its assessment of this plausible market the Commission has also considered the arguments presented in the below section as regards the overall  market,  and  in  particular concerning the absence of significant barriers to entry and expansion, the availability of other suppliers  and  the  impact  of  the  Transaction  that  also  apply  to  the  assessment  of branded ricotta.

(595)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard  to the  plausible   market of branded  ricotta  in Germany.

(B) Overall market for ricotta in Germany

(596)    Based on the Commission’s methodology, Adjusted market shares  for  the  overall market  for  ricotta  in  Germany  are as follows.

(597)    The Transaction results in an affected market because of  Lactalis’  large  market presence with branded products, with strong and widely recognised brands, such as Galbani. Nuova  Castelli has  a  more limited  presence  in  the  overall  market  for ricotta in Germany, bringing  a  moderate  increment  of Nuova  Castelli’  market  share  of [5-10]%.

(598)    Beside the considerations concerning  the  shares  of  the  market  for ricotta in  Germany, the Commission considers  that  the  Transaction  does  not  raise serious doubts  for the  following  reasons.

(599)    First, after the Transaction, the merged entity will  continue  to  face  significant  competitive pressure from Trentin as  well  as  from  more than  two  branded  and private label competitors, which accounted for [40-50]% of the overall  market  for ricotta in Germany. These competitors are likely to continue exercising competitive pressure on the merged entity comparable  to  the  pressure  exercised  by  Nuova Castelli  on Lactalis   pre-Transaction.

(600)    Second, with regard to the  ability  of customers  to  switch  suppliers  of ricotta,  while  the majority of customers that  responded  to  the  market  investigation  had  not switched suppliers of branded or private label ricotta in the last three years, (446)  the majority of competitors and customers that expressed a view indicated that it was possible  and  even easy to switch  suppliers  of  ricotta. (447)

(601)    Third, concerning barriers  to  entry  and  expansion,  the  majority  of  the  respondents  to the market investigation that expressed a view indicated that there were not  significant  barriers  to entry  or expansion  in  terms  of costs and  time. (448)

(602)    Moreover, different from other fresh cheese products discussed  above  for which  access to milk has been assessed as a potential barrier  to  entry,  ricotta  is  produced from a by-product of other cheese production. In particular, as explained by the Notifying Party, ricotta is manufactured by heating whey to 80° C. The market investigation confirmed  that  ricotta is  by-product  of  whey, (449)  which  is  a  liquid derived from the  production  of  soft  and  fresh  cheese  (e.g.  mozzarella) (450). The Parties use their leftovers of  whey to  produce  ricotta as  well  as  milk powder. Nuova  Castelli  also sells  part of its  whey  to third  parties.

(603)    Furthermore, in 2018, there were more than four competitors (besides  the  Parties)  active in the overall market for ricotta and at  least  one  competitor  indicated  that  it could increase its production of ricotta without  incurring in  significant  additional costs. (451)

(604)    Fourth,  one  competitor indicated  that  as  a  result  of  the  Transaction,  it  expects prices for ricotta to decrease in Germany. (452) With regard to German customers,  the market  investigation  was inconclusive. (453)

(605)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the  internal  market  on  the  plausible  market  for  branded ricotta  in Germany.

(606)    In conclusion, in light of the above and based on the information available to the Commission  and  provided  by  Parties,  the  Commission  considers  that   the Transaction does not raise serious doubts as to its  compatibility  with  the  internal  market on the  overall  market  for  ricotta  in Germany.

5.7.3. Mascarpone

(607)    Both  Parties  supply branded  mascarpone  in  the  Germany,  but  only  Lactalis  supplies private label. Based on the  information  provided  by  the  Notifying  Party, Nuova Castelli does not produce,  but  only  trades,  branded  mascarpone.  It  purchases […] of its requirements from […] and resells it as further developed in paragraphs  (368) to (369).

(A) Branded mascarpone in Germany

(608)    First, Nuova  Castelli  had   very   limited   sales  of  branded  mascarpone   in  Germany in  2018. The  Transaction  will   bring  a limited   increment   to Lactalis’   market share.

(609)    Second, the Commission  notes  that  the  third  party  data  relied  on  by  the Commission to establish the Adjusted market shares of the Parties  and  their  competitors   point  at a very  minimal  overlap  for  the supply  of branded mascarpone.

(610)    Based on the Adjusted  market  share  data,  if  potentially  relevant  segment  for  branded mascarpone was considered, the combined Adjusted market shares of the  Parties  would  be [50-60]% (Lactalis:  [40-50]%; Nuova  Castelli  [5-10]%). (454)

(611)    However, the Commission notes that third party data,  as  explained  in  Section  5.2, does not record small sales and does not track all outlets in the retail channel. In particular,  similarly  to Nuova  Castelli,  other  suppliers,  which   constitute   a  competitive pressure on the Parties,  are  likely underestimated  by  the  same  data sources that record very minimal  sales  from  Nuova   Castelli.

(612)    Third, the  Commission  also observes  that  the  branded  segment  in  the  overall market for mascarpone has below  [20-30]%  share  of  the  overall  market,  which would  indicate  that  the  main competitive  constraint  in  the  market  comes  from  private label  mascarpone,  irrespective  of  whether  it  belongs  to  the  same  market  or  it  is  assessed as a constraint   from  outside  the market.

(613)    Fourth, the  merged  entity  will  continue  to  face  significant  competitive  constraints from four other branded suppliers (Goldsteig, Minus L, De Lucia, and Exquisa). Considering reported sales three  of  them  are  roughly  the  same size  as  Nuova Castelli  and one of them,  Goldsteig,   is 3 times   bigger.

(614)    The Commission has  also  considered  in  its  assessment  that  the  arguments  presented in the below section as regards the overall market, and in particular concerning the absence of significant barriers to entry and expansion,  the  availability of  other  suppliers and lack of barriers to switching with respect to  this  plausible  market  also apply  to the  assessment  of branded mascarpone.

(615)    In view of the above, the Commission  finds that  the  Transaction  does  not  raise  serious doubts as to its compatibility with the internal market  with  regard  to  the  branded mascarpone.

(B) Overall market for mascarpone in Germany

(616)    Based on the Commission’s methodology, Adjusted market shares  for  the  overall market  for  mascarpone  in  Germany  are as follows.

(617)    Nuova Castelli had very limited  sales  of branded  mascarpone  in  Germany  in  2018. The  Transaction will  bring  a  limited  increment  to  Lactalis’  market  share  in  Germany.

(618)    Beside the considerations concerning the competitive landscape and shares  of  the  market for mascarpone in Germany, the Commission considers  that  the  Transaction  does not  raise  serious  doubts  for  the following reasons.

(619)    First, after the Transaction, the merged entity will  continue  to  face  significant  competitive pressure from other brands as well as from  private  label  competitors.  These competitors are  likely to  continue   exercising  significant   competitive  pressure on the merged entity compared  to  the  limited  pressure  exercised  by  Nuova  Castelli on Lactalis  pre-Transaction.

(620)    Second, with regard to the ability of customers  to  switch  suppliers  of mascarpone,  none of  German  retailers  that  responded  to  the  market  investigation  considered  that it  was not possible  to switch  to different   supplier  of mascarpone (456).

(621)    Moreover, in relation to the fact that Nuova Castelli distributes […] products, one German retailer mentioned […] as an  alternative  supplier  for  mascarpone (457).  As further explained in paragraphs (368)  to  (369)  […]  could  become  an  alternative  in the  short  term,  supplying  its  own products.

(622)    Third, the Commission notes that, according to the Notifying Party, to produce mascarpone, dairy companies can use the milk fat either to produce either cream or mascarpone. Manufacturing mascarpone is a  way  to  add  value  to  the  left  overs  of  the production of cheese. Dairy companies in Italy have a particular incentive to manufacture   mascarpone:  the market  for  cream is very  small  in Italy,

(623)    In view of this, the market  investigation  confirmed  that  investment  to  enter  mascarpone production  are  relatively  low.  According to the  notifying  party investments for the production  of  1,000  tons  of  mascarpone  would  amount  to roughly EUR 1 million. By way of comparison, the entire Lactalis private label mascarpone  sales  in  Germany  are […]. (458)

(624)    This  finding  was confirmed  also by  retailers  responding   to  the   market   investigation. With regards to potential barriers to entry when asked if there are any significant barriers to the entry or  expansion  for  mascarpone  in  terms  of costs  and  time  all  of German  retailers  answered  that there  aren't.  (459)

(625)    Fourth, there has been a new entrant in the mascarpone market in Germany. As  explained by a  German  retailer  a  new  competitor  Fude&Serran  entered  the  market in  2015 as private  label  supplier.  (460)

(626)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market on the plausible market for branded mascarpone  in Germany.

(627)    In conclusion, in light of the above and based on the information available to the Commission  and  provided  by  Parties,  the  Commission  considers  that   the Transaction does not raise serious doubts for the overall market for mascarpone in Germany.

5.7.4.Other markets

(628)    The  Transaction results  in  additional affected markets   in   Germany,   and   in particular  in  the  plausible  markets  for branded cow  milk mozzarella  and  Gorgonzola,   and for the  overall  (branded  and private  label)  Gorgonzola.

(629)    However, in all  these  markets  the  Transaction  results  in  a  negligible  increment  due  to the  small  presence  of  Nuova  Castelli,  bringing  a  limited  or  moderate  increment  to Lactalis’   shares,  and  the presence  of other  competitors  in these markets.

(630)    On this basis the  Commission  finds that  the  Transaction  does  not  raise  serious doubts  concerning  these markets.

5.8. Poland

(631)    Based on the market share data submitted by the Parties and  in  light  of  the methodology used (see Section 5.2), the Transaction gives rise to the following horizontally   affected   plausible   markets   in    Poland:    Cow    milk   mozzarella (Section 5.8.1; ricotta (Section 5.8.2), Gorgonzola  (Section  5.8.3)  and  Italian-type hard cheeses  (Section 5.8.4).

5.8.1.Cow milk mozzarella

(632)    Both Lactalis and Nuova Castelli supply branded  and  private  label  cow  milk mozzarella to  retailers  in  Poland.  As  outlined  by  the  market  shares,  the  main overlap between the Parties in cow milk mozzarella  is  in  the  supply  of private  label cow milk   mozzarella   to retailers  in  Poland.

(A) Branded cow milk mozzarella  in Poland

(633)    For branded cow  milk mozzarella,  following  the  Commission’s  methodology  described in Section 5.2, the combined  market  share  of  the  Parties  in  2018  in  Poland was [40-50]% (in volume), with  a  limited  increment  of  Nuova  Castelli’s market share  of [0-5]% in view  of Nuova Castelli’s  limited   brand   presence. (461)

(634)    First, Nuova  Castelli  had  limited   sales  of  branded  cow  milk   mozzarella  in  Poland in 2018 ([…]) and thus does not enjoy strong brand presence. The  Transaction will  bring  a limited   increment  to Lactalis’   market share  of [0-5]%.

(635)    Second, after the Transaction, the merged entity will continue to face  significant competitive pressure from several  suppliers  of  branded  cow  milk mozzarella, including  Zottarella,  Formagia,   Bakoma,   Jager   and   Osm  Skierniewice.   According to the data provided by the Parties and based on the  Commission’s  analysis  (see  Section 5.2), in 2018 each of these suppliers represented a stronger competitive constraint than Nuova Castelli with  regard  to  branded  cow  milk mozzarella  in Poland. Their individual sales of  branded  cow  milk mozzarella  were  significantly higher than Nuova  Castelli’s  sales  and  accounted  for [10-20]%  of  the  overall  market for  cow milk   mozzarella   in  Poland  (see Table  21 below).

(636)    Third,  the  merged  entity  will  also continue  to  face   significant   competitive  constraints  from several  additional smaller  suppliers  of  branded cow   milk  mozzarella that will remain in the Polish market post-Transaction. These suppliers accounted  for [0-5]%  of  the   overall  market   for   cow  milk   mozzarella   in  Poland in  2018 (see Table  21 below).

(637)    In its assessment,  the  Commission  has  also  considered  the  arguments  presented  in  the below section as regards the overall market, and  in  particular  concerning  the absence of significant barriers to entry and expansion, the  availability of  other  suppliers, customers’ ability to multi-source  and  the  impact  of  the  Transaction  that also  apply to the assessment  of branded cow milk    mozzarella.

(638)    In conclusion, based  on  the  information  available  to  the  Commission  and  provided  by Parties, the Commission finds  that  the  Transaction does not  raise  serious  doubts  as to its  compatibility  with  the  internal  market  with  regard  to  the  plausible  market  of branded  cow milk   mozzarella   in Poland.

(B)     Private label cow milk mozzarella  in Poland

(639)    For private label cow milk mozzarella, based on the market shares provided by the Parties, the combined market share  of the  Parties  in  2018  in  Poland  was [50-60]% (in volume), with a moderate  increment  of  Nuova  Castelli’s  market  share  of  [5- 10]% in  view  of Nuova Castelli’s   moderate  brand presence.

(640)    First, Nuova Castelli had moderate sales of private  label  cow  milk mozzarella  in  Poland in 2018 ([…]) bringing a moderate increment of [5-10]% to  the  combined market share.

(641)    Second, after the Transaction, the merged entity will continue to face significant competitive pressure from several suppliers of private label cow milk mozzarella. According to the data provided by the Parties  and  based  on  the  Commission’s analysis (see Section 5.2), in 2018 these suppliers combined represented a stronger competitive constraint than Nuova Castelli with regard to private label cow milk mozzarella in  Poland.  Their  combined  sales  of  private  label  cow  milk mozzarella were  significantly  higher than  Nuova  Castelli’s  sales  and   accounted  for  [20-30]% of the  overall  market  for cow milk   mozzarella  in Poland  (see Table  21 below).

(642)    In its assessment,  the  Commission  has  also  considered  the  arguments  presented  in  the below section as regards the overall market, and  in  particular  concerning  the absence of significant barriers to entry and expansion, the  availability of  other  suppliers, customers’ ability to multi-source  and  the  impact  of  the  Transaction  that also  apply to the assessment  of private  label  cow milk    mozzarella.

(643)    In conclusion, based  on  the  information  available  to  the  Commission  and  provided  by Parties, the Commission finds  that  the  Transaction does not  raise  serious  doubts  as to its  compatibility  with  the  internal  market  with  regard  to  the  plausible  market  of private  label  cow milk   mozzarella   in Poland.

(C) Overall features of the cow milk mozzarella market in Poland

(644)    Based on the Commission's methodology, Adjusted market shares  for  the  overall  market for  cow milk   mozzarella  are as follows.

(645)    The Transaction results in an affected market  because  of  Lactalis’  sales  of  private label cow milk mozzarella. Nuova Castelli has a moderate presence  in  the  overall market for cow  milk mozzarella  in  Poland,  bringing a  moderate  increment  of [5-10]% to Lactalis’   market share.

(646)    Beside the considerations concerning the competitive landscape and shares  of  the  market for cow milk mozzarella in Poland, the Commission considers that  the  Transaction  does not raise  serious  doubts  for the  following  reasons.

(647)    First, the Commission observes that the overall market of  cow  milk mozzarella  in Poland appears  to be  fragmented  (see  Table  21  above) with  competitors comparable to Nuova Castelli.  Moreover,  a  Polish  customer  indicated  that  there were more  than  three  viable  suppliers  of cow milk   mozzarella   in Poland. (463)

(648)    Second, after the Transaction, the merged entity will continue to face significant competitive pressure from several branded and private label suppliers that in 2018 accounted  for [40-50]%  of  the  overall  cow  milk mozzarella  market  in  Poland. These competitors are likely to  continue  exercising  competitive  pressure  on  the merged entity comparable to the pressure exercised by Nuova Castelli on Lactalis pre-Transaction.

(649)    Third,  with  regard  to  multi-sourcing,  the  majority  of  customers   that  responded  to the  market  investigation  indicated  that  they  source  cow  milk mozzarella  from  two  or more suppliers in 2018. (464) A Polish customer indicated that it awards its required volumes of cow milk mozzarella to  one  supplier  but  it  runs  selection  procedures  for the  procurement  of cow milk   mozzarella   more  than once  a year. (465)

(650)    Fourth, as regards barriers to expansion, the  market  investigation  suggested  that  at  least one Polish supplier would be  able  to  increase  its  existing  production  capacity  and another  one  would  be  able  to  increase  the  amount  of cow  milk  mozzarella  that it  trades in  case there  would  be an increase  in  demand  in Poland.- (466)

(651)    Fifth, with regard to the impact of the Transaction and based on  the  market investigation, a Polish customer indicated  that  competition  would  decrease; (467) however, the majority of Polish competitors that provided a view indicated that the Transaction would  not  have  a  significant  impact  in  any  market  for Italian-type cheeses  or on their  companies. (468)

(652)    Finally, the Commission  found  that  the  Transaction  does  not  raise  serious  doubts  as to its compatibility with  the  internal  market  on  the  plausible  markets  for  branded  cow milk mozzarella in Poland as  well  as  private  label  cow  milk mozzarella  in Poland.

(653)    Based on the above considerations and in the light of the results of the market investigation,  the  Commission  considers  that the  concentration   does   not   raise serious doubts as to its  compatibility  with  the  internal  market  on the  overall market  for  cow milk   mozzarella   in Poland.

5.8.2. Ricotta

(654)    Lactalis and Nuova Castelli are  active  in  the  market  for  ricotta in  Poland.  Both Parties  sell  branded ricotta  and Nuova  Castelli  also  sells  private  label ricotta.

(A) Branded ricotta in Poland

(655)    For  branded ricotta,  following  the   Commission’s   methodology   described   in  Section 5.2, the combined Adjusted market share  of  the  Parties  in  2018  in  Poland was [30-40]% (in  volume),  with  a  limited  increment  of  Nuova  Castelli’s  market share  of [0-5]% in  view  of Nuova  Castelli’s  very limited   brand presence. (469)

(656)    First, in  this  plausible  market,  the  Transaction  results  in  a  negligible  increment  due  to the  very limited   sales  ([…]) and presence  of Nuova Castelli.

(657)    Second, after the Transaction, the merged entity will continue to face significant competitive pressure from the  strongest  branded  competitor to  Lactalis,  Ceko,  as  well as Talma  and  Biraghi.  According to the  data provided by the  Parties and based  on the Commission’s analysis (see Section 5.2 above), in  2018  each  of  these  suppliers individually represented  a  stronger  competitive  constraint  than  Nuova Castelli  with  regard  to  branded  ricotta   in  Poland.  Ceko  accounted  for    [20-30]%, Talma for [10-20]% and Biraghi for [0-5]%  of the  overall ricotta  market  in  Poland (see Table  22 below).

(658)    Third,  the  merged  entity  will  also continue  to  face  competitive  constraints   from other smaller suppliers of branded ricotta that will remain in the Polish market post-Transaction and that accounted for [0-5]% of the overall market for ricotta in Poland  in  2018 (see Table  22 below).

(659)    In its assessment,  the  Commission  has  also  considered  the  arguments  presented  in  the below section as regards the overall market, and  in  particular  concerning  the absence of significant barriers to entry and expansion, the  availability of  other  suppliers, the ability of customers to switch suppliers  and  the  impact  of  the  Transaction  that  also apply  to the  assessment  of branded ricotta.

(660)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard  to the  plausible   market of branded  ricotta  in Poland.

(B) Overall market for ricotta in Poland

(661)    Based on the Commission’s methodology, Adjusted market shares  for  the  overall market for  ricotta  in Poland  are as  follows.

(662)    The Transaction results in an affected market because of Lactalis’ market share in branded products and Nuova Castelli’s market presence with private label products, bringing an increment to  Lactalis’  market  share  of  [20-30]%  in  the  overall  market for  ricotta  in  Poland  (see Table  22 above).

(663)    Beside the considerations concerning the competitive landscape and shares  of  the  market for ricotta  in  Poland,  the  Commission  considers  that  the  Transaction  does  not raise  serious  doubts  for the  following  reasons.

(664)    First, after the Transaction, the merged entity will  continue  to  face  significant  competitive pressure from the strongest  competitor  to  Lactalis,  Ceko.  According  to the data provided by the  Parties  and  based  on  the  Commission’s  analysis  (see Section 5.2), in 2018 Ceko  represented  a  stronger  competitive  constraint  than  Nuova Castelli with regard to  the  overall market  for  ricotta  in  Poland.  Ceko’s sales of ricotta were significantly higher than Nuova Castelli’s sales and accounted for [20-30]% of the overall  ricotta  market  in  Poland.

(665)    Second,  the  merged  entity  will  also continue  to  face  significant  competitive constraints from more than  two  additional competitors,  which  accounted  for [10-20]% of the overall market for  ricotta  in  Poland.  These  competitors,  together  with Ceko, are likely to  continue  exercising  competitive  pressure  on  the  merged entity comparable to the pressure exercised by Nuova Castelli on Lactalis pre- Transaction.

(666)    Third, with regard to the ability of customers to  switch  suppliers  of  ricotta,  the  majority of customers that responded to the market investigation had not switched suppliers of branded or private label ricotta in the last three years; (471) however,  the majority of competitors and customers that responded to the market investigation  indicated   that it  was possible  to switch  suppliers   of ricotta. (472)

(667)    Fourth, concerning barriers to entry and expansion, the majority of competitors that responded  to  the  market  investigation  indicated   that  there  were  significant  barriers  to expansion in terms  of costs  and  time,  including  a  Polish  competitor. (473)  However, the majority of customers that responded to  the  market  investigation  indicated  that  there were not significant barriers to  entry or expansion for  ricotta  in  terms  of costs  and time   in  their  countries.  (474)

(668)    Moreover, different from other fresh cheese products discussed  above  for which  access to milk has been assessed as a potential barrier  to  entry,  ricotta  is  produced from a by-product of other cheese production. In particular, as explained by the Notifying Party, ricotta is manufactured by heating whey to 80° C. The market investigation confirmed  that  ricotta is  by-product  of  whey, (475)  which  is  a  liquid  derived from the  production  of  soft  and  fresh  cheese  (e.g.  mozzarella) (476). The Parties use their leftovers of  whey to  produce  ricotta as  well  as  milk powder. Nuova Castelli also sells  part  of  its  whey  to  third  parties.  In  addition,  the  majority of customers that  responded  to  the  market  investigation  indicated  that  there  were  not significant barriers to  entry  or  expansion  for ricotta in  terms  of  costs  and time. (477)

(669)    Fifth, the  majority  of  customers that  responded  to  the  market  investigation  indicated that  the  Transaction  will  not  have  impact  on  prices  for the  supply  of ricotta in their countries. (478)  Moreover,  a  competitor  indicated  that  it  expected  prices for  ricotta  to decrease in  Poland. (479)

(670)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the  internal  market  on  the  plausible  market  for  branded ricotta  in Poland.

(671)    In conclusion, in light of the above and based on the information available to the Commission  and  provided  by  Parties,  the  Commission  considers  that   the Transaction does not raise serious doubts as to its  compatibility  with  the  internal  market on the  overall  market  for  ricotta  in Poland.

5.8.3. Gorgonzola

(672)    Lactalis  supplies  branded  Gorgonzola  to  retailers  in  Poland,  whereas   Nuova Castelli supplies  a  very  limited  volume  of  branded  Gorgonzola  and  moderate volumes  of  private  label  Gorgonzola  to  retailers.   The   Parties’  activities   in  relation to Gorgonzola in Poland give rise  to  an  affected market  if  the  overall  market including branded and private label  was  considered,  as  well  as  if  branded Gorgonzola   is considered.

(A) Branded Gorgonzola in Poland

(673)    For branded Gorgonzola, following the Commission’s  methodology  described  in Section 5.2, the combined market share of the Parties in  2018  in  Poland  was  [50-60]% (in  volume),  with  a  limited  increment  of  Nuova  Castelli’s’  market  share  of [0-5]% in  view  of Nuova Castelli’s  very limited   brand  presence. (480)

(674)    The  Commission  observes that   Nuova   Castelli's   limited   significance   in   the plausible market for branded Gorgonzola in Poland can be demonstrated by the de minimis   sales  of […] in  the  entire  year 2018.

(675)    In light of the above, the Commission considers that the  Transaction will  not substantially  modify  the  market  structure and  will  not  remove  a  significant competitive   constraint   for branded  Gorgonzola   in Poland.

(676)    In its assessment of this plausible market,  the  Commission  also considered  the arguments presented in the below section as regards the overall  market,  and  in  particular   concerning  other  available   suppliers,   and the  impact  of the Transaction

(677)    In conclusion and based on  the  information  available  to  the  Commission  and provided by  Parties,  the  Commission  finds that  the  Transaction does  not  raise serious doubts as to  its  compatibility  with  the  internal  market  on  the  plausible market  of branded Gorgonzola   in Poland.

(B)  Overall market for Gorgonzola in Poland

(678)    Based on the Commission’s methodology, Adjusted market shares  for  the  overall market for  Gorgonzola  market in  Poland  are as  follows.

(679)    In the overall market for the supply of Gorgonzola to  retailers  in Poland, the  Parties  have a combined Adjusted market share of [30-40]% (in volume), with a moderate increment   of [10-20]% due to Nuova  Castelli’s   moderate presence.

(680)    First, the Transaction results  in  an  affected market  because  of  Lactalis’  large  market presence with branded  products,  with  strong  and  widely  recognised  brands  of Gorgonzola, and in particular Galbani. Nuova Castelli had moderate sales of Gorgonzola in Poland in  2018  ([…])  and  thus  does  not  enjoy  strong  brand presence. The  Transaction will  bring  a  moderate  increment  of  [10-20]%  to  Lactalis’   market share.

(681)    Second, this is consistent with the fact that Nuova Castelli does not enjoy  strong  presence in Gorgonzola. As confirmed to the Commission by a  third  party, (482)  the  market  for Gorgonzola  is  strictly  regulated  by  the  Consorzio,  there  are   several active players both in branded  and  private  label  and  Nuova  Castelli  is  a  much smaller member player than  Igor  or  Lactalis. (483) A  third  party  described  Nuova Castelli  as “rather small when it comes to Gorgonzola.” (484)

(682)    Third, after the Transaction, the merged entity will continue to  face  significant  competitive pressure from  the  strongest  competitor  to  Lactalis,  Igor.  According  to  the data provided by the  Parties  and  based  on  the  Commission’s  analysis  (see Section 5.2), in 2018 Igor represented a stronger competitive constraint than Nuova Castelli with regard to Gorgonzola in Poland. Igor’s sales of Gorgonzola  were significantly higher than Nuova Castelli’s sales and accounted for [10-20]%  of  the overall  Gorgonzola   market  in Poland.

(683)    Fourth,  the  merged  entity  will  also continue  to face   significant   competitive constraints from several other branded and private label suppliers which in 2018 accounted for [40-50]% of the overall market for Gorgonzola in Poland. These competitors are likely to continue  exercising  competitive  pressure  on  the  merged entity   comparable   to  the   pressure   exercised   by  Nuova   Castelli  on  Lactalis pre-

Transaction

(684)    Beside the considerations concerning the structure and  shares  of  the  Gorgonzola  market in Poland, the Commission considers that  the  Transaction  does  not  raise  serious  doubts  for  the following reasons.

(685)    First, from the point  of  view  of  customers,  the  market  investigation  suggested  that  the majority of retailers do not believe that there are barriers in terms  of cost  and time. (485)

(686)    Second, the majority  of respondents  indicated  that  it  was  easy or possible  to  switch to a different   supplier  of Gorgonzola. (486)

(687)    Third, the majority of the  customers  and  two  Polish  competitors  that  responded  to  the market investigation indicated that the  Transaction  will  have  no  impact  on  the prices  of Gorgonzola   in  their countries. (487)

(688)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market on the plausible market for branded Gorgonzola   in Poland.

(689)    Based on the above considerations and in light of the results of  the  market  investigation,  the  Commission  considers  that  the  concentration   does   not   raise serious doubts as to its  compatibility  with  the  internal  market  on the  overall market  for  Gorgonzola   in Poland.

5.8.4. Italian-type hard cheese

(690)    Lactalis supplies only branded Italian-type hard cheeses, whereas Nuova  Castelli supplies mainly private label and to some limited  extent  branded  Italian-type  hard cheeses to retailers in  Poland.  The  Commission  notes  that  the  main  overlap  giving  rise to an affected market is in the  segment  for  branded Italian-type  hard  cheese. In  light of this, the Commission will assess the likely effects of the Transaction on  the branded  segment  and the  overall  market for  the  Italian-type   hard  cheese  in Poland.

(691)    As a preliminary remark, the Commission notes that the Parties did not  provide third-party panel data  to  substantiate  their  estimates  for the  total  market  size  and their  market  shares.  Therefore, for this  part,  the  Commission  will  rely  on  the  volume   market  shares  data as submitted   and substantiated   by the Parties. (488)

(A) Branded Italian-type hard cheeses in Poland

(692)    If only the potentially relevant branded segment was  considered,  the  Parties’  combined  market  shares  in  terms  of  volume  in  2018  would   be   [60-70]% (Lactalis: [50-60]%, Nuova Castelli: [5-10]%). First, the relatively small increment indicates that  Nuova  Castelli  has  only  limited  activities  in  the  branded  segment, which  correspond  to […] of actual  sales  through  the full  year of 2018.

(693)    Second,  following  the  Transaction the  Parties  will  continue  facing  effective competitive  constraints  from other  branded products suppliers  that  in  2018 accounted for [30-40]% of the relevant segment.  In  this  regard,  one  customer submitted in  the  market  investigation  that  in  Poland Ambrosi  enjoys a  strong position (was referred to for Parmigiano Reggiano as the next strongest brand to Zarpellon, and for Grana Padano as the next strongest brand to Lactalis’ brand Galbani). (489)

(694)    Third, the Commission observes that  the  demand for branded  Italian-type  hard cheeses concerns about  [50-60]%  of  the  overall  market.  Given  the  important  share of the  private  label  segment  in  the  overall  market,  the  Commission  considers  that  it is likely that  private  label,  at  least  to  some  extent,  exerts  competitive  pressure  on the branded segment. In  particular,  since  the  competition  for Italian-type  hard  cheeses, which include products covered by  a  Protected  Denomination  of Origin,  is less affected by brand presence in view of the predominant role carried by such denominations (Parmigiano Reggiano, Grana Padano). Therefore, it  makes  the  assessment of a market only consisting  of  branded  product  much  less  significant  in this context.  In  this  regard,  the  Parties  submitted  that  brands  carry  little  weight  as the selling point is mostly the PDO branding. The presence of the PDO  logos  on  a cheese wheel or bag of Parmigiano Reggiano ensures and  indicates  to  the  consumer  that this cheese is produced, and the milk collected, exclusively in the PDO area,  delivering recognition  and  quality  perception  expected  from  a  brand.  In  line  with  this one competitor also explained: “The PDO brands enjoy high notoriety that  it takes away “space” from private brands and indirectly attracts attention of private labels”. (490)

(695)    In its assessment of this plausible market,  the  Commission  also considered  the arguments presented in the below section as regards the overall  market,  and  in  particular   availability  of other  suppliers,  and the  impact  of the  Transaction.

(696)    In conclusion and based on  the  information  available  to  the  Commission  and provided by  Parties,  the  Commission  finds that  the  Transaction does  not  raise serious doubts as to its compatibility with the internal market with  regard  to  the  plausible   market  of branded Italian-type   hard cheese  in Poland.

(B) Overall market for Italian-type hard cheese in Poland

(697)    On the overall market for Italian-type hard cheeses in Poland, based on the market  shares data submitted  by  the  Parties,  their  combined  market  shares  in  volume  terms in  2018 would  be lower:  [50-60]% (Lactalis:  [30-40]%; Nuova  Castelli: [20-30]%).

(698)    Although, post-Transaction the Parties will have large combined market shares, the Commission considers that the concentration does not raise serious doubts  for  the  supply  of Italian-type   hard cheeses  in  Poland  for  the following reasons.

(699)    First,  the  Parties  have  submitted  that  following  the  Transaction,  the  merged  entity  will  continue  to face  credible competitive  constraints  from the   remaining  competitors. The  other  companies  active  in  this  hypothetically  relevant  market  are, for  example, Ambrosi (491) and Zanetti (492).

(700)    Third, in the private label segment, based on the Parties’ data, more than half of the demand is covered by other suppliers. The Parties have indicated that the following companies   are   active   in   Poland   in   private   label   segment: Euroser (Formagia), Zarpellon, and Brazzale. (493)

(701)    Fourth, Lactalis depends on the supply of Italian-type hard cheese from other manufacturers, such as […] or […],  for  its  trading  activity. (494)  While  Nuova  Castelli has limited overall shares of production  in  relation  to  PDO  cheeses,  it  competes  closer with those companies that  are  also  active  in  production  of  PDO  cheeses  rather  than  only  trading them.

(702)    Fifth, the Commission considers that it cannot be excluded  that  companies  active  in other national markets could  potentially  expand  their  activities  in  Poland.  In  this regard,  the  Parties  submitted  that  competitors in  Italian-type  hard   cheese   could easily expand and gain market shares in national markets, in particular referring to companies such as Zanetti, Ambrosi, Colla, Parmareggio. (495) The majority of  all customers expressing  their  views  in  the   market   investigation   suggested  that  there are no significant entry or expansion barriers in terms of cost and time. (496) The Commission notes that  in  the  market  investigation  a  third-party  has  also  indicated  that in recent years there indeed have been several new  entries  into  the  national  markets  of companies  who  previously  only  had been active  in  Italy. (497)

(703)    Sixth, the  majority  of  customers and  competitors expressing their  views  in  the  market investigation  indicated  that  the  Transaction  will  not  have  impact  on  prices  for  the supply  of Italian-type   hard cheeses  in  their countries. (498)

(704)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market on the plausible market for branded Italian-type   hard cheeses  in Poland.

(705)    In light of the above and based on the information available to the Commission and provided by Parties, the Commission considers that the Transaction does not raise  serious  doubts  on the  overall  market  for Italian-type   hard cheeses  in Poland.

5.8.5. Milk procurement

(706)    Lactalis and Nuova Castelli only  procure  conventional  cow  milk  in  Poland,  and  do not procure buffalo nor sheep milk  there.  In particular,  the  Parties  procure  both raw and pasteurised  cow milk   in  the  country.

(707)    For conventional cow  milk,  the  market  share  of the  Parties  in 2018 for  procurement of combined raw and pasteurised cow milk in Poland was below [0-5]%, with an increment   of approximately  [0-5]%. (499)

(708)    For conventional raw cow milk, the market share of the Parties  in  2018  for procurement of conventional raw cow milk in Poland was below [0-5]%, with an increment   of [0-5]%. (500)

(709)    For conventional pasteurised cow milk, the market share of the Parties in 2018 for procurement of conventional pasteurised cow milk in Poland was [20-30]%, with  a  small  increment of [5-10]%. (501)

(710)    In light of the above, the Commission’s analysis will focus on the  market  for conventional  pasteurised  cow milk   in  Poland.

(711)    First, the overall market  for  pasteurised  cow  milk in  Poland  is  much  smaller  than  that  of raw milk   (approximately  82 times).

(712)    Second, the Notifying Party used imports of bulk pasteurized milk in  Poland  (as indicated by CLAL) (502) as a proxy. Therefore, the Notifying Party submits that this underestimates the total size of the market,  given  that  it  is  frequent  that  dairy companies buy pasteurized milk that  is  not  imported  (but  merely  traded  within  one  and the same Member State). Accordingly, the market shares presented are conservative. (503)

(713)    Third, in Poland, Lactalis operates a plant in […], whereas Nuova Castelli runs a production plant in […], which is located in a different part of the country.  Nuova Castelli  also  imports  milk   from  Germany  for its  Polish  plant  of […]. (504)

(714)    Fourth,  Nuova  Castelli  procures  very  limited  volumes  of  milk in  Poland,  i.e.,  […] in  2018, which  represents  a [0-5]% market share. (505)

(715)    Based on the above considerations and in light of the results of  the  market  investigation,  the  Commission  considers  that the  concentration   does   not   raise serious doubts as to its  compatibility  with  the  internal  market  as  regards  the plausible   market  for  the procurement  of conventional  cow milk   in  Poland.

5.8.6. Other markets

(716)    The  Transaction  results  in  additional  affected   markets  in  Poland,   and  in  particular in the plausible markets for branded and  overall  (private  label and  branded)  buffalo milk  mozzarella.

(717)    However, in this market the Transaction results in a  negligible  increment  due  to  the small presence of Nuova Castelli based on its  limited  volume  of  sales  or  shares, and/or  the presence  of other  competitors  in  this market.

(718)    On this basis the  Commission  finds that  the  Transaction  does  not  raise  serious doubts  concerning  these markets.

5.9. Sweden

(719)    Based on the market share data submitted by the Parties and  in  light  of  the methodology used (see Section 5.2), the Transaction gives rise to the following horizontally   affected   plausible   markets   in   Sweden:  Cow   milk   mozzarella  (Section  5.9.1) and Italian-type   hard cheese  (Section 5.9.2).

5.9.1. Cow milk mozzarella

(720)    Lactalis supplies mainly branded cow milk mozzarella, whereas  Nuova  Castelli  has limited sales of both  branded  and  private  label  cow  milk mozzarella  in  Sweden. While the data available to the Commission indicates that Lactalis had very limited recorded sales of private label cow milk mozzarella in Sweden ([…] in 2018), the Commission  notes  that  the  overlap giving  rise  to  a  plausible  affected  market  is  in  the segment for branded cow milk mozzarella. In  light  of this,  the  Commission  will assess the likely effects of the Transaction on the branded segment and  the  overall market for  cow milk   mozzarella  in  Sweden.

(A) Branded cow milk mozzarella  in Sweden

(721)    If only the potentially relevant branded  segment  was  considered,  the  Parties  combined Adjusted market shares would be: [30-40]% (Lactalis: [30-40]%, Nuova Castelli: [5-10]%). (506) The Commission  notes  that  the  low  increment  of [5-10]%  to  the market shares represents recorded  sales  of  Nuova  Castelli  of less  than  […]  in the entire year 2018  and  indicates  low  significance of  Nuova  Castelli as  a competitive constraint in the plausible branded product market  for cow  milk  mozzarella.

(722)    Second, following the Transaction the  Parties  will  continue  to  face  effective competitive constraints from several credible  competitors.  Based  on  the  third-party data (see Table 24), the Commission considers that the supply of branded cow milk mozzarella  in  Sweden  is  rather  fragmented  with  several  strong  competitors  present in this plausible market. The  Commission  observes  that  the  leading  supplier  of branded  cow  milk mozzarella  is  Michelangelo,  followed  by  Lactalis  and   Zeta.  There is also a further company Wernersson  that  competes  in  this  segment  and  supplies  slightly  larger  volumes  than  recorded  volumes   of  Nuova   Castelli,   which are the smallest   from  all  branded products suppliers.

(723)    Third, the small presence of Nuova Castelli on the  branded  segment  can  be  explained by low notoriety of its brands Di Vittorio and Castelli. (507) None of the customers from Sweden  responding in  the  market  investigation  listed  Nuova Castelli’s   brands  among  the strongest  brands  for cow milk   mozzarella. (508)

(724)    Fourth,  the  Commission  observes  that  although  both  Lactalis  and  Nuova  Castelli are active in the branded segment, they are not the closest competitors because of different strength of their brands. According to  the  customers from Sweden expressing views,  the  strongest  brands  for  cow  milk mozzarella  are  Michelangelo  and  Lactalis’  brand  Galbani. (509) The  Commission  notes  that  this  is  directly  reflected  in  their  market shares.

(725)    Fifth, the customers from Sweden  responding to  the  market  investigation  also indicated that it is possible to switch to a different supplier for branded cow milk mozzarella. (510)  However,  as  one  customer  explained  that  switching  is  possible  “if   the  brands  are  equally  strong”. (511)   The  Commission  considers  that  given  different level of strength of the Parties’ brands, the Transaction will likely not  remove  an  effective   competitive   constraint  in  this segment.

(726)    In its assessment of this plausible market,  the  Commission  also considered  the arguments presented in the below section as regards the overall  market,  and  in  particular  concerning  the  market  structure,  availability  of  alternative   suppliers,   and the  impact  of the Transaction.

(727)    In conclusion and based on  the  information  available  to  the  Commission  and provided by  Parties,  the  Commission  finds that  the  Transaction does  not  raise serious doubts as to its compatibility with the internal market with  regard  to  the  plausible   market  of branded cow milk   mozzarella   in Sweden.

(B) Overall market for cow milk mozzarella in Sweden

(728)    On the overall market for cow  milk mozzarella  in  Sweden,  based  on  the  market share data submitted by the Parties and in  light  of  the  methodology  described  in Section 5.2,  the  combined  Adjusted  market  shares  of  the  Parties  in  volume  terms  in  2018 were  [20-30]% (Lactalis:  [10-20]%, Nuova Castelli: [5-10]%).

(729)    Although,  post-Transaction  the  Parties   will   have   moderate   combined   market shares, the Commission considers that  the  Transaction  does  not  raise  serious doubts for the supply of cow milk mozzarella under any plausible market definition for the following  reasons.

(730)    Further to the considerations provided in  relation  to  the  branded  segment  of  the overall market, the Commission observes that the demand for branded cow milk mozzarella    concerns    [50-60]%   of   the    overall    market    (see    Table    24).   The Commission notes that the share  of  the  private  label  segment  has  been  growing  in  the  last  three  years  (from [40-50]% in  2016 to [50-60]% in 2018). (513)

(731)    Given  the  growing  importance  of  the  private  label  segment  in  the  overall  market, the Commission considers that it is likely that private label,  at  least  to  some  extent, exerts competitive pressure on the  branded  segment.  The  Commission  notes  that Nuova Castelli has only a  small  presence  in  the  private  label  segment  ([5-10]%  of the overall market (514)) as  recorded  in  Table  24), in which other suppliers  cover most  of the demand. Based on the Parties’ submitted data, the  main  players  in the  private label   segment    in    Sweden   are   Bayernland:   [[10-20]   of   the   overall  market]%; Zott:  [5-10]%; Latteria  Tinis:  [5-10]%; Granarolo  [10-20]%; and Villa:    [0-5]%. (515)

(732)    In line with the above, the Commission considers that the market  for  cow  milk mozzarella is fragmented with  several  credible players both  in  the  branded  and private label segments. As one customer in Sweden  explained  referring  to  entry  barriers for cow milk mozzarella: “It is a tough market  with strong brands as Zeta  and Galbani and a lot of price fighting brands”. (516)

(733)    The results of the market investigation also support  the  finding  that  customers  in Sweden have credible suppliers other  than  the  Parties  and  that  it  is  possible  to  switch suppliers. (517) Accordingly, the Commission considers that  following  the Transaction, the merged entity will continue to  face  competitive  constraints  from  credible  competitors.

(734)    Overall, none of the customers from Sweden taking part in the market investigation expressed  concerns  related  to the Transaction. (518)

(735)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its  compatibility  with  the  internal  market  on  the  plausible  market  for  branded cow milk   mozzarella   in Sweden.

(736)    Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the Transaction does not raise  serious doubts as to its compatibility with the  internal  market  on the  overall market for  cow milk   mozzarella   in Sweden.

5.9.2. Italian-type hard cheese

(737)    Lactalis supplies only branded Italian-type hard cheeses, whereas Nuova  Castelli supplies mainly private label and to some limited  extent  branded  Italian-type  hard cheeses to retailers in  Sweden.  In  light  of  this,  the  Commission  will  assess  the likely effects of the Transaction  on the  branded  segment  and  the  overall  market  for the  Italian-type   hard  cheeses in Sweden.

(A) Branded Italian-type hard cheeses in Sweden

(738)    First, if only the  segment  of  branded  Italian-type  hard  cheeses  was  considered, based on the Adjusted market share data, the Parties’  combined  Adjusted  market  shares in volume terms in 2018 would be: [20-30]% (Lactalis: [20-30]%; Nuova Castelli: [0-5]%). (519) The low increment of [0-5]% to the market shares represents minimal recorded sales of Nuova Castelli of […] in the entire year 2018 and also indicates low significance of Nuova  Castelli as  a  competitive  constraint  in  the  plausible   branded product market.

(739)    Second, following the Transaction the Parties will continue to  face  competitive constraints from several  credible competitors.  In  the  branded  segment  in  Sweden, Zeta is the leading supplier with […], which is double than the Parties’ combined  recorded sales of branded products. The  Commission  notes  that  further  [5-10]% of the overall demand is  covered  by  sales  under other  brands,  which  would  correspond to almost four times larger sales than  the  recorded  volume  of  Nuova Castelli.

(740)    Third, one  customer  from  Sweden  also explained  that  Sweden  is  a  small  market and Zeta and Galbani enjoy brand notoriety in Sweden. (520) None of the customers responding listed Nuova Castelli as their supplier. Accordingly, the  Commission  considers  that  this  further  supports  the  finding  that  Nuova  Castelli  is   not  exerting an  effective  competitive  constraint  for the  supply of  branded  Italian-type  hard cheese  in Sweden.

(741)    Fourth, competition for Italian-type  hard  cheeses,  which  encompass  products covered by a  Protected  Denomination  of Origin,  is  less  affected  by  brand  presence in view of  the  predominant  role carried  by  such  denominations  (Parmigiano  Reggiano, Grana Padano). Therefore, it makes the assessment of a  market  only consisting  of  branded  product  much  less significant  in   this   context.  In  particular, the  Parties  submitted  that  brands  carry  little  weight  as  the   selling  point  is   mostly  the PDO branding. The presence of the PDO logos on a cheese wheel or bag of Parmigiano Reggiano ensures and indicates to the consumer  that  this  cheese  is produced,  and  the  milk collected,  exclusively  in  the  PDO  area,   delivering  recognition and quality perception expected from a brand. In line with this one competitor also explained: “The PDO brands enjoy high notoriety  that  it  takes away “space” from private brands and indirectly attracts attention of private labels”. (521)

(742)    In light of the above and in particular given  the  very  limited  activities  of  Nuova  Castelli,  the  Commission  considers  that  the   Transaction   will   not   substantially modify  the  market  structure and  will  not   remove   a   significant   competitive constraint   for  branded Italian-type-hard  cheese  in Sweden.

(743)    In its assessment of this plausible market,  the  Commission  also considered  the arguments presented in the below section as regards the overall  market,  and  in  particular  concerning  the  market  structure,   availability   of   alternative   suppliers, limited   competitive   position  of Lactalis   and the impact  of the  Transaction.

(744)    In conclusion and based on  the  information  available  to  the  Commission  and provided by  Parties,  the  Commission  finds that  the  Transaction does  not  raise serious doubts as to its compatibility with the internal market with  regard  to  the  plausible   market  of branded Italian-type   hard cheeses  in Sweden.

(B) Overall market for Italian-type hard cheese in Sweden

(745)    On the overall market for Italian-type hard cheeses in Sweden, based on the market  share data submitted by the Parties and in  light  of  the  methodology  described  in Section 5.2,  the  combined  Adjusted  market  shares  of  the  Parties  in  volume  terms  in  2018 were: [20-30]% (Lactalis:  [5-10]%; Nuova Castelli:   [10-20]%).

(746)    Although,  following  the  Transaction the  Parties  will  have  moderate   combined  market shares, the  Commission  considers  that  the  concentration does  not  raise serious doubts for the supply of Italian-type hard cheeses in Sweden for the reasons already  discussed  above  and the following  reasons.

(747)    First, as observed in other countries, the  market  structure  for  the  supply  of Italian-  type  hard  cheeses  in  Sweden  suggests  that  strong  competitive  constraints  come from private label segment, which has approximately [60-70]% share in the overall market in 2018 compared to [40-50]% in 2016. (523)  The  Parties  activities  do  not  overlap in this segment. Based on the data  in  Table  25, other private  label suppliers  than Nuova Castelli account for  a  significant  part  ([40-50]%)  of the  overall demand for Italian-type hard cheese in Sweden. The Parties have indicated that following companies   are  active   in   private  label  supply  in  Sweden:  Soresina,  Ferrari, Zanetti, Wernersson,  and Colla. (524)

(748)    Second, following the Transaction the  Parties  will  continue  to  face  effective competitive constraints from several credible competitors in branded, as well  as  in private    segments.    Further    to  competitors   listed    in   paragraphs   (739)   -   (740), and (747), in the market investigation, a customer from Sweden indicated further companies Di Luca and Gennaro Auricchio  as  its  top  suppliers  for  private  and branded  label  Italian-type   hard cheeses. (525)

(749)    Third, Lactalis depends on the supply of Italian-type hard cheeses from other manufacturers, such as […] or […],  for  its  trading  activity. (526)  While  Nuova  Castelli has limited overall shares of production  in  relation  to  PDO  cheeses,  it  competes  closer with those companies that  are  also  active  in  production  of  PDO  cheeses  rather  than  only  trading them.

(750)    Fourth, the Commission  considers  that  it  cannot  be  excluded  that  companies  active  in other national markets could potentially expand their activities in Sweden. In  this regard,  the  Parties  submitted  that  competitors in  Italian-type  hard   cheese   could easily expand and gain market shares in national markets, in particular referring to companies such as Zanetti, Ambrosi, Colla, Parmareggio. (527) The majority of  all  customers expressing  their  views  in  the   market   investigation   suggested  that  there are no significant entry or expansion barriers in terms of cost and time. (528) The Commission notes that in the market investigation  the  Consortia  for Parmigiano Reggiano has also indicated that in recent years there indeed have been several new entries into the  national  markets  of companies  who  previously  only  had  been  active in Italy. (529)

(751)    Fifth, none of the customers from Sweden expressed concerns related to the Transaction. (530) As one customer explained: “On the Swedish market, Castelli is a  very small brand, and will not have any impact on the market situation”. (531)

(752)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market on the plausible market for branded Italian-type   hard cheese  in Sweden.

(753)    Based on the above considerations and in the light of the results of the market investigation  and  the  information  submitted  by  the  Parties,   the   Commission  considers that the Transaction does not raise  serious  doubts  as  to  its  compatibility  with the internal market  on  the  overall market  for Italian-type  hard  cheese  in Sweden.

5.9.3. Other markets

(754)    The Transaction  results  in  additional  affected  markets  in  Sweden,  and  in  particular  in the plausible markets for branded ricotta, mascarpone and Gorgonzola,  and  the  overall  (private  label  and branded) Gorgonzola.

(755)    However, in this market the Transaction results in a  negligible  increment  due  to  the small presence of  Nuova  Castelli  based  on  its  limited  volume  of  sales  or  shares, and the  presence  of other  competitors  in  this market.

(756)    On this basis the  Commission  finds that  the  Transaction  does  not  raise  serious doubts  concerning  these markets.

5.10. Denmark

(757)    Based on the market share data submitted by the Parties and  in  light  of  the methodology used (see Section 5.2), the Transaction gives rise to the following horizontally  affected   plausible   markets   in   Denmark:   Cow   milk   mozzarella  (Section 5.10.1);  mascarpone  (Section  5.10.2)  and  Italian-type  hard  cheeses (Section 5.10.3).

5.10.1.  Cow milk mozzarella

(758)    Both Lactalis and Nuova Castelli supply branded and  private  label  cow  milk mozzarella   to retailers  in  Denmark.

(A) Branded cow milk mozzarella  in Denmark

(759)    For branded cow  milk mozzarella  the  combined  Adjusted  market  share  of  the Parties in 2018 in Denmark was [30-40]% (in volume), with Lactalis’ adding an increment  of [5-10]% to Nuova  Castelli  [20-30]% market  share. (532)

(760)    First, Lactalis  has   moderate   sales   of  branded  cow  milk   mozzarella   in   Denmark in  2018 and  thus  does not enjoy  strong  brand presence  contrary  to other markets.

(761)    Second, after the Transaction, the merged entity will continue to face significant competitive pressure from the alternative branded suppliers. According to the data provided by the  Parties  and  based  on the  Commission’s  analysis  (see  Section  5.2), in 2018 the competitors for branded  mozzarella  represented  [70-80]%  of  the  market.

(762)    Third,  market  investigation  shows  that  retailers  in  Denmark  have  the  ability   to switch branded mozzarella suppliers.  As  explained  by a  retailer:  ‘Due  to  difference of opinion regarding buying prices made us delist Galbani and list Trentin. This  has been reversed in 2019’. (533)

(763)    Therefore, given the market  shares,  and  given  that  the  increment  brought  about  by  the transaction is moderate, the plausible branded market will continue  having  a multitude   of credible  suppliers   with  established   commercial  relations   with retailers.

(764)    The Commission has  also  considered  in  its  assessment  that  the  arguments  presented in the below section as regards the overall market, and in particular concerning the availability of other suppliers, lack of barriers to switching and the impact of the Transaction with respect to this plausible market also apply to the  assessment  of  branded  cow milk  mozzarella.

(765)    In view of the above, the Commission  finds that  the  Transaction  does  not  raise  serious doubts as to its compatibility with the internal market  with  regard  to  the  branded  cow milk  mozzarella.

(B)     Private label cow milk mozzarella  in Denmark

(766)    In the private label segment there seem to  be  a  number  of viable  competitors  that  offer volumes of cow milk mozzarella  to  retailers  in  Denmark. Based  on  the Notifying   Party’s   estimates,    there   is    a   significant   number   of  alternative    private label supplier in Denmark: Bayerische Milchindustrie eG: [5-10]%; Spezialitäten-  Käserei Wiegert GmbH:  [5-10]%;  Caseificio  Villa  srl:  [5-10]%;  Goldsteig  Käsereien  Bayerwald  GmbH: [0-5]%;

(767)    The Commission has  also  considered  in  its  assessment  that  the  arguments  presented in the below section as regards the overall market, and in particular concerning the availability of other suppliers, lack of barriers to switching and the impact of the Transaction with respect to this plausible market also apply  to  the  assessment  of  private  label  cow milk   mozzarella.

(768)    In view of the above, the Commission  finds that  the  Transaction  does  not  raise  serious doubts as to its compatibility with the  internal  market  with  regard  to  the  private  label  cow milk   mozzarella.

(C)     Overall marketfor cow milk mozzarella in Denmark

(769)    On the overall market for the supply of branded  and  private  label  cow  milk  mozzarella to retailers in Denmark, and in  light  of  the  methodology  described  in Section 5.2, the Parties had a combined market share in 2018 of [40-50]%, with an increment  of [10-20]%.

(770)    Beside the considerations concerning the competitive landscape and shares  of  the  market for cow milk mozzarella in Denmark, the Commission considers that the Transaction  does not raise  serious  doubts  for the  following  reasons.

(771)    First, the Commission observes that the overall market of cow milk mozzarella in Denmark appears to be fragmented with several credible competitors.  A  Danish  retailer   indicated   that  it   had   three  viable  suppliers  of  cow  milk   mozzarella. (535)  The results     of   the     market     investigation    indicate     that     there     are   further   additional suppliers   of branded  and private  label  cow milk   mozzarella   in Denmark. (536)

(772)    Second, after the Transaction, the merged entity will continue to face  significant competitive pressure from several branded and private label suppliers that in 2018 accounted for [50-60]% of the overall  cow  milk mozzarella  market  in  Denmark. These competitors are likely to  continue  exercising  competitive  pressure  on  the merged entity comparable to the pressure exercised by Nuova Castelli on Lactalis pre-Transaction.  As  an  illustration  of  this  competitive   interaction,   a   Danish customer indicated  that  for a  given  tender  of  private  label  mozzarella  issued  recently  there  were four  participants. (537)

(773)    Third, the two Danish retailers that expressed a view  in  the  market  investigation indicated that it was easy to switch  to  a  different  supplier  of  cow  milk  mozzarella. (538)

(774)    Fourth, with regard to the impact of the Transaction and based on the market investigation, out of the Danish customers  that  provided  a  view,  one  indicated  that  this will lead to less supplier options. However, the other two indicated that the Transaction would not have a significant impact in any  market  for Italian-type cheeses. (539)

(775)    Finally, the Commission  found  that  the  Transaction  does  not  raise  serious  doubts  as to its compatibility with  the  internal  market  on  the  plausible  markets  for  branded  cow milk mozzarella  in  Denmark  as  well  as  private  label  cow  mozzarella  in Denmark.

(776)    Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the Transaction does not raise  serious doubts as to its compatibility with the  internal  market  on the  overall market for  cow milk   mozzarella   in Denmark.

5.10.2.  Mascarpone

(777)    Both  Parties  supply branded mascarpone  in  the  Denmark, but   only   Lactalis supplies private label. Based on the  information  provided  by  the  Notifying  Party, Nuova Castelli does not produce,  but  only  trades,  mascarpone.  It purchases […] of its  requirements   from […].

(A)  Branded mascarpone in Denmark

(778)    Both Lactalis and Nuova Castelli supply branded  mascarpone  to  retailers  in  Denmark.

(779)    For  branded  mascarpone  the   combined   Adjusted   market   share   of  the   Parties   in 2018 in Denmark was  [40-50]%  (in  volume),  with  Lactalis  adding  an  increment  of [10-20]% to Nuova  Castelli  [20-30]% market share. (540)

(780)    First, Lactalis had moderate sales of branded mascarpone  in  Denmark  in  2018  and thus  does not enjoy strong  brand presence contrary to other    markets.

(781)    Second, after the Transaction, the merged entity will continue to face significant competitive pressure from the alternative branded suppliers. According to the data provided by the  Parties  and  based  on the  Commission’s  analysis  (see  Section  5.2), in 2018 the competitors for branded mascarpone  represented  [50-60]%  of  the  market.

(782)    Third,  the  merged  entity  will  continue  to  face  significant   competitive   constraints from Trentin which roughly is as big  as  Nuova  Castelli,  as  well  as  from  other branded suppliers which together represent more than  [20-30]%  of  the  overall market  for  mascarpone  in Denmark.

(783)    The Commission has  also  considered  in  its  assessment  that  the  arguments  presented in the below section as regards the overall market, and in particular concerning the availability of other suppliers, the absence of significant barriers  to  entry  and  expansion, lack of barriers to switching with  respect  to  this  plausible  market  also apply  to the  assessment  of branded mascarpone.

(784)    In view of the above, the Commission  finds that  the  Transaction  does  not  raise  serious doubts as to its compatibility with the internal market  with  regard  to  the  branded mascarpone.

(B) Overall market for mascarpone in Denmark

(785)    Based on the Commission’s methodology, Adjusted market shares  for  the  overall market  for  mascarpone  in  Denmark  are as follows.

(786)    Beside the considerations concerning the competitive landscape and shares  of  the  market for mascarpone in Denmark, the Commission considers  that  the  Transaction does not  raise  serious  doubts  for  the following reasons.

(787)    First, after the Transaction, the merged entity will continue  to  face  significant  competitive  pressure  from  other brands as well  as from  private  label  competitors.

(788)    According to sales  data  provided  by  the  Parties,  Lactalis  in  light  of  the methodology described in Section 5.2 appears to  have  higher  sales  in  private  label than the private label market size as reported by third  parties  providers.  However  based  on  the  Notifying  Party’s  estimates,  there  is  a  significant   number   of  alternative private label  supplier  in  Denmark:  Trentin:  [20-30]%;  Centrale  del  Latte di  Brescia:  [10-20]%.  These competitors are  likely to continue   exercising  significant  competitive   pressure  on the  merged entity.

(789)    Second, with regard to the ability of customers to switch suppliers of mascarpone,  Danish retailers that responded  to  the  market  investigation  considered  that  it  was  easy to switch to  different  supplier  of  mascarpone (542).  Market  investigation  shows  that retailers in  Denmark  have  the  ability  to  switch  branded  mascarpone  suppliers.  As explained by a retailer: ‘We switched from Lactalis to Trentin and back  again  due to difference of opinion regarding buying prices’. (543)

(790)    Therefore, the branded side of  the  market  will  continue  having a  multitude  of credible  suppliers  with  established   commercial   relations   with retailers.

(791)    Third, the Commission notes that, according to the Notifying Party, to produce mascarpone, dairy companies can use the milk fat either to produce cream or mascarpone. Manufacturing mascarpone is a  way  to  add  value  to  the  left  overs  of  the production of cheese. Dairy companies in Italy have a particular incentive to manufacture   mascarpone:  the market  for  cream is very  small  in Italy.

(792)    In view of this, the market  investigation  confirmed  that  investment  to  enter  mascarpone production are relatively low. According to  the  Notifying  Party  investments for the production  of  1,000  tons  of  mascarpone  would  amount  to roughly EUR 1  million.  By  way  of  comparison, the  entire  Danish  market  is  reported by third  party data to be 173  tons.

(793)    This  finding  was confirmed  also by  retailers  responding   to  the   market   investigation. With regards to potential barriers to entry when asked if there are any significant barriers to the entry or  expansion  for  mascarpone  in  terms  of costs  and  time  none  of the Danish  retailers  replied  that  there  were barriers  to  entry. (544)

(794)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market on the plausible market for branded mascarpone  in Denmark.

(795)    Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the Transaction does not raise  serious doubts as to its compatibility with the internal market on the overall market for mascarpone  in Denmark.

5.10.3.  Italian-type hard cheese

(796)    Lactalis  supplies  only  branded  Italian-type  hard  cheese  in  Denmark, whereas  Nuova Castelli supplies mainly branded and to some limited extent private label Italian-type hard cheeses to retailers  in  Denmark.  Given  that  the  main  overlap  is  in  the supply of branded Italian-type  hard  cheese,  the  Commission  will  assess  the effects of the  Transaction in  relation  to  the  branded  segment  and  the  overall market.

(A)  Branded Italian-type hard cheese in Denmark

(797)    First, if  only  the  segment  of  branded  Italian-type  hard  cheese  was  considered, based on the Commission’s Adjusted market shares  methodology,  the  Parties’ combined market shares  in  volume  terms  in  2018  would  be  just above  the threshold: [20-30]% (Lactalis: [0-5]%; Nuova Castelli: [10-20]%). (545) The  low increment of [0-5]% to the market shares  represents  minimal  recorded  sales  of Lactalis of […] in  the  entire  year  2018  and  also indicates  low  significance of  Lactalis   as a competitive  constraint  in the  plausible   branded product  market.

(798)    Second, several credible competitors remain for the  supply  of  branded  Italian-type  hard cheese, which would continue to exert competitive pressure  on  the  Parties following the Transaction see (see Table 28). As recorded by this third-party data, Lactalis  supplies  several  times  smaller  quantities   than   the   number   1   supplier Zanetti and number 2 supplier Ambrosi.  The  results  of  the  market  investigation  support the finding that Zanetti is an important competitive force. (546) In addition, Italian-type cheese  manufacturers  Granarolo and  Trentin  were mentioned  as alternative   suppliers. (547)

(799)    Third,  competition  for Italian-type  hard  cheeses,  which   encompass   products covered by a  Protected  Denomination  of Origin,  is  less  affected  by  brand  presence in view of  the  predominant  role carried  by  such  denominations  (Parmigiano  Reggiano, Grana Padano). Therefore, it makes the assessment of a  market  only consisting  of  branded  product  much  less significant  in   this   context.  In  particular, the  Parties  submitted  that  brands  carry  little  weight  as  the   selling  point  is   mostly  the PDO branding. The presence of the PDO logos on a cheese wheel or bag of Parmigiano Reggiano ensures and indicates to the consumer  that  this  cheese  is produced,  and  the  milk collected,  exclusively  in  the  PDO  area,   delivering  recognition and quality perception expected from a brand. In line with this one competitor also explained: “The PDO brands enjoy high notoriety  that  it  takes away “space” from private brands and indirectly attracts attention of private labels”. (548)

(800)    In  light  of  the  above  and  in  particular  given  the  very  limited  activities  of  Lactalis, the Commission  considers  that  the  Transaction will  not  substantially  modify  the market  structure and  will  not  remove  a  significant  competitive   constraint   for branded  Italian-type   hard  cheese in Denmark.

(801)    In its assessment of this market, the Commission also considered  the  arguments presented in the below section as regards the overall  market,  and  in  particular concerning the market structure, availability of alternative suppliers, absence  of  significant barriers to entry and expansion, and the  limited  competitive  position  of Lactalis.

(802)    In conclusion and based on  the  information  available  to  the  Commission  and provided   by   Parties,   the   Commission   finds   that   the   Transaction   does  not  raise serious doubts as to its compatibility with the internal market with  regard  to  the  plausible   market  of branded Italian-type   hard cheeses  in Denmark.

(B) Overall market for Italian-type hard cheese in Denmark

(803)    On the overall market for Italian-type  hard  cheeses  in  Denmark, based  on  the market share data submitted  by  the  Parties  and  in  light  of  the  methodology  described in Section 5.2  (see  Table  28),  the  combined  market  shares  of the  Parties in   volume   terms   in   2018    were:    [20-30]%    (Lactalis:    [0-5]%;    Nuova Castelli: [10-20]%).

(804)    Since post-Transaction the Parties will have moderate combined market shares, the Commission considers that the Transaction does  not  raise serious doubts  for  the supply of Italian-type  hard  cheeses  in  Denmark  under any  plausible  market  definition  for  the reasons  set out  above, and also  for  the following  reasons.

(805)    First, given that the Transaction brings about a small increment  in  market  share ([0-5]%), the Commission  considers  that  the  concentration will  not  substantially modify   the  market  structure  for  the supply  of Italian-type   hard  cheese in Denmark.

(806)    Second,  overall the  large  majority  of  customers in   the   market   investigation indicated that it was possible to switch suppliers of Italian-type hard cheese. (550) One Danish  customer also  explained  that  it  is  possible  to  switch  suppliers  for  Italian-  type  hard cheeses:  “I haven't tried but I suppose that it will be quite easy.”  (551)

(807)    Third, Lactalis depends on  the  supply  from  other  manufacturers,  such  as  […]  or […], for its trading activity of Italian-type hard cheeses. While  Nuova  Castelli  has limited overall shares of production in  relation  to  PDO  cheeses,  it  competes  closer with those companies that are also active  in  production  of PDO  cheeses rather  than only  trading  them.

(808)    Fourth, in contrast to other countries, the demand for Italian-type hard cheeses in Denmark concerns primarily branded products, while  private  label  covers approximately [30-40]% of the overall demand. Nonetheless, based on the Parties’ submitted data, the Commission observes the  same,  albeit  not  to  the  same  extent, trend  in  Denmark   of  increasing   share   of  private   label   segment   (from  [5-10]%  in 2016 to [10-20]% in 2018). Based  on the  data  provided  by the  Parties,  Zanetti  and Ambrosi are also active in the  private  label  segment  in  Denmark. (552)  Given  the very limited activities  of  Nuova  Catelli  in  this  segment  (the  recorded  sales  volumes of […], see Table 28), the Commission considers that it  cannot  be  excluded  that  private label suppliers, at least to some extent, would continue to exert competitive pressure  on the  branded products suppliers.

(809)    Fifth, the Commission considers that it cannot be excluded  that  companies  active  in other national markets could potentially expand their activities in Denmark.  In  this  regard,  the  Parties  submitted  that  competitors in  Italian-type  hard   cheese   could easily expand and gain market shares in national markets, in particular referring to companies such as Zanetti, Ambrosi, Colla, Parmareggio. (553) The majority of  all  customers expressing  their  views  in  the   market   investigation   suggested  that  there are no significant entry or expansion barriers in terms of cost and time. (554) The Commission notes that in the market investigation  the  Consortia  for Parmigiano Reggiano has also indicated that in recent years there indeed have been several new entries into the  national  markets  of companies  who  previously  only  had  been  active in Italy. (555)

(810)    Sixth, considering the impact of the Transaction, from  all  Danish  customers that provided a view in the market investigation  one  indicated  that  the  Transaction  may  lead to less supplier options. This customer has, however, also indicated that it is “confident that it can procure the desired quantities and quality from other suppliers”, as well as that it is “not concerned about logistics and distribution regarding other suppliers”. (556) The other two  customers  expressing views  indicated that the Transaction would not have  a  significant  impact  in  any  market  for  Italian-  type cheeses. (557)

(811)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its compatibility with the internal market on the plausible market for branded Italian-type  hard cheeses  in  Denmark.

(812)    Based on the above considerations and in the light of the results of the market investigation, the Commission considers that the Transaction does not raise  serious doubts as to its compatibility with the internal market on the overall market for Italian-type   hard cheese  in Denmark.

5.10.4. Other markets

(813)    The  Transaction results  in  additional affected markets   in   Denmark,   and   in particular in the plausible markets for branded buffalo milk mozzarella, ricotta, mascarpone and Gorgonzola, and for the overall  (private  label and  branded)  buffalo milk   mozzarella,   overall  ricotta  and overall  Gorgonzola  markets.

(814)    However, in all  these  markets  the  Transaction  results  in  a  negligible  increment  due  to the small presence of Nuova Castelli based on its limited sales volume and  the presence  of other  competitors  in these markets.

(815)    On this basis the  Commission  finds that  the  Transaction  does  not  raise  serious doubts  concerning  these markets.

5.11.    Portugal

(816)    Based on the market share data submitted by the Parties and  in  light  of  the methodology used by  the  Commission  (see  Section  5.2),  the  Transaction  gives  rise to an affected  market  in  Portugal  in  cow milk  mozzarella.

5.11.1.  Cow milk mozzarella

(817)    Lactalis supplies branded cow milk mozzarella to retailers in  Portugal.  Conversely, Nuova Castelli  supplies  very  small  volumes  of  branded,  as  well  as  private  label cow milk   mozzarella.

(A) Branded cow milk mozzarella  in Portugal

(818)    For branded cow milk mozzarella, first the combined Adjusted market shares  of the Parties is [70-80]%, with  a  moderate  increment  of  [5-10]%. (558)  The  Transaction results in an affected market only because of Lactalis’ large market presence with branded  products,  sold under  Galbani  brand. (559)

(819)    Second, this is consistent with the  fact  that,  in  Portugal,  Nuova  Castelli  does  not enjoy strong brand  presence  in  cow  milk mozzarella,  but  focuses primarily on  private  label  supplies  of this  product  to retailers.

(820)    Third, several other credible competitors of  Lactalis  are  active  in  the  branded segment,  for  instance  Zanetti,  Solo  Italia,  Lago   Maggiore  and  Valgrande.  Overall, the Parties’ competitors in a plausible branded market  have  a  solid  presence  in Portugal  with  competitive  brands.

(821)    The market investigation supports the  finding  that  a  number  of credible  competitors can and do offer volumes  of  branded  cow  milk mozzarella  to  retailers  in  Portugal  and compete in the negotiations organised by retailers. Data  collected  from  retailers show  that  they  have   sourced  from  one  or  more   suppliers   other  than  the   Parties in 2018. (560)

(822)    Therefore, the branded segment of the market will  continue  having  a  reasonable number of credible suppliers with established commercial relations with retailers in Portugal.

(823)    In  its  assessment  of  this  plausible  market,  the  Commission  has  also  considered  in  its assessment the arguments presented in the below section as regards the  overall market,  and  in  particular  concerning  the  availability of  other  suppliers  and  the  impact of the Transaction that also apply to the assessment of branded cow milk mozzarella.

(824)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard  to the  plausible   market of branded  cow milk   mozzarella   in Portugal.

(B) Overall market for cow milk mozzarella in Portugal

(825)    On the overall market  for branded  and  private  label  cow  milk mozzarella  in Portugal, the combined Adjusted  market  shares  of  the  parties  is  [30-40]%.  (see Table  29 below).

(826)    The Commission observes that  the  overall market  for cow  milk mozzarella  in Portugal appears to be fragmented, with  several active  players  both in  the  branded  and private  label.

(827)    Beside the considerations concerning the structure and shares of  the  cow  milk mozzarella market, the Commission considers that the Transaction  does  not  raise  serious  doubts  for  the following reasons.

(828)    First, the  Commission  finds,  based  on  the  market  investigation,  that  barriers   to entry are not high for suppliers of cow milk mozzarella in Portugal,  and  that  these barriers  are mainly  linked   to the  presence  of relationships   with  local distributors. (562)

(829)    Second, as regards expansion, the market investigation suggested that a number of suppliers  active  in  Italy  and  Germany  could  increase supply in  the  short  term without   incurring  significant  cost.

(830)    Third, as regards the impact of the Transaction,  the  vast  majority  of  responsive retailers in Portugal believe that the Transaction will have no impact on  their companies. (563)

(831)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its  compatibility  with  the  internal  market  on  the  plausible  market  for  branded cow milk   mozzarella   in Portugal.

(832)    Based on the above considerations and in the light of the results of the market investigation,  the  Commission  considers  that the  concentration   does   not   raise serious doubts as to its  compatibility  with  the  internal  market  on the  overall market  for  cow milk   mozzarella   in Portugal.

5.11.2. Other markets

(833)    The Transaction  results  in  additional  affected  markets  in  Portugal,  and  in  particular  in  the  plausible  markets  for branded buffalo milk mozzarella,  ricotta   and  mascarpone; for private label Gorgonzola and for the  overall  (branded  and  private  label)  ricotta,  mascarpone,  Gorgonzola   and Italian-type   hard cheeses.

(834)    However, in all  these  markets  the  Transaction  results  in  a  negligible  increment  due  to the small presence of Nuova Castelli based  on  its  limited  volume  of  sales  or shares,  and/or  the presence  of other  competitors  in  these markets.

(835)    On this basis the  Commission  finds that  the  Transaction  does  not  raise  serious doubts  concerning  these markets.

5.12. Finland

(836)    Based on the market share data submitted by the Parties and  in  light  of  the methodology used (see Section  5.2),  the  Transaction gives  rise  to  horizontally affected plausible market in Finland for  cow  milk mozzarella  (Section  5.12.1)  and other  affected  markets  (Section 5.12.2).

5.12.1.  Cow milk mozzarella

(837)    Lactalis  supplies  only  branded  cow  milk mozzarella,  whereas  Nuova   Castelli supplies mainly  private  label  and  branded  cow  milk mozzarella  to  retailers  in Finland. The Commission  notes  that  the  main overlap giving  rise  to  an  affected market is in the segment for branded cow milk mozzarella. In light of  this,  the Commission  will  assess  the  likely effects  of  the  Transaction on  the  branded  segment  and the  overall  market  for  the cow milk   mozzarella   in Finland.

(838)    The Commission notes that the Parties did  not provide  third-party panel data for  the year 2018 to substantiate their estimates for the total market size and  their  market  shares. Therefore, for this  part,  the  Commission  will  rely  on  the  volume  market shares  data as submitted   and substantiated   by the Parties.

(A) Branded cow milk mozzarella  in Finland

(839)    For branded cow milk mozzarella, the Parties combined market shares would be [40-50]% (Lactalis:  [20-30]%, Nuova  Castelli:  [20-30]%). (564)

(840)    First, considering panel data from 2017 provided by the Parties there were several competitors with higher market shares than Nuova Castelli, such as Granarolo or Juustoportti. (565)

(841)    Second, the market  investigation  has  indicated  the  presence  of a  significant  number  of alternatives for  retailers  in  relation  to  the  supply  of branded  cow  milk  mozzarella in Finland. (566)

(842)    In  its  assessment  of  this  plausible  market,  the  Commission  has  also  considered  in  its assessment the arguments presented in the below section as regards the  overall market,  and  in  particular  concerning  the  availability of  other  suppliers  and  the  impact of the Transaction that also apply to the assessment of branded cow milk mozzarella.

(843)    In conclusion, in light of the above and based on the information available to the Commission and  provided  by  Parties,  the  Commission  finds that  the  Transaction does not raise serious doubts as to its compatibility  with  the  internal  market  with  regard to the  plausible  market of branded cow milk   mozzarella  in     Finland.

(B) Overall market for cow milk mozzarella in Finland

(844)    For the overall market for cow milk mozzarella  in  Finland,  based  on  the  market  shares data submitted by the Parties, their combined market share in 2018 does not amount to an affected market ([10-20]% in volume, Lactalis: [5-10]% and; Nuova Castelli: [10-20]%), However, for the sake of completeness,  the  Commission  will  assess this  plausible   overall  market.

(845)    The Commission  considers  that  the  Transaction  does  not  raise  serious  doubts  for the supply of cow milk mozzarella under any plausible market  definition  for  the following  reasons.

(846)    First, according to the data submitted by the Parties, following the Transaction  the  merged entity will continue  to  face  credible competitive  constraints  from the  remaining competitors.  Based  on  the  Notifying  Party’s  estimates,  there  appears  to be  a  significant  number  of  alternative  suppliers  for private  label  cow  milk  mozzarella in Finland: Bayerische Milchindustrie: [30-40]% and  Pirkka:  [20-30]%. These competitors, in addition  to  the  competitors active  in  branded  products  are likely   to continue   exercising  significant   competitive   pressure  on the  merged entity.

(847)    Second, the Commission observes that,  according  to  2017  panel  data,  the  demand for private label cow milk mozzarella represented [60-70]% of  the  overall  market. Given that private label accounts  for  an  important  share  of  the  overall  market  and the very limited activities of  one  of  the  Parties  (Nuova  Castelli:  [5-10]%  market  share in 2017)  on  that  segment,  the  Commission  considers  that  it  cannot  be excluded that other  private  label  suppliers,  at  least  to  some  extent,  would  continue  to exert competitive   pressure  on branded  products suppliers.

(848)    Third, a Finish retailer that  expressed  its  views  during  the  market  investigation indicated that the Transaction will have no impact on competition in  relation  to  the supply  of Italian-type   cheese.  (567)

(849)    Finally, the Commission found  that  the  Transaction does not  raise  serious  doubts  as  to its  compatibility  with  the  internal  market  on  the  plausible  market  for  branded cow milk   mozzarella   in Finland.

(850)    In light of the above and based on the information available to the Commission and provided  by  Parties,  the  Commission  considers  that  the  Transaction  does  not   raise serious doubts as to its  compatibility  with  the  internal  market  on the  overall market  for  cow milk   mozzarella   in Finland

5.12.2. Other markets

(851)    The  Transaction  results  in  additional  affected   markets  in  Finland,  and  in  particular  in  the  plausible  markets  for branded  buffalo milk mozzarella,   ricotta,   mascarpone and Italian-type  hard  cheese.

(852)    However, in all  these  markets  the  Transaction  results  in  a  negligible  increment  due  to the small presence of Nuova Castelli based  on  its  limited  volume  of  sales  or shares,  and the  presence  of other  competitors  in  these markets.

(853)    On this basis the  Commission  finds that  the  Transaction  does  not  raise  serious doubts  concerning  these markets.

5.13. Belgium

(854)    The  Transaction  results  in  additional  affected  markets  in  Belgium,   and  in  particular in the plausible markets for the overall (private label  and  branded)  cow  milk mozzarella, overall buffalo milk mozzarella, overall ricotta and overall  mascarpone markets.

(855)    However, in all  these  markets  the  Transaction  results  in  a  negligible  increment  due  to the small presence of Nuova Castelli, which bring a very  limited  increment  to  Lactalis’   shares,  and the  presence  of other  competitors  in  these markets.

(856)    On this basis the  Commission  finds that  the  Transaction  does  not  raise  serious doubts  concerning  these markets.

5.14. The Netherlands

(857)    The Transaction results in additional affected markets in The Netherlands, and in  particular in the plausible markets for branded cow milk mozzarella, buffalo milk mozzarella, ricotta and mascarpone, and for the  overall  (branded  and  private  label) cow milk   mozzarella,   buffalo   milk   mozzarella,   ricotta  and mascarpone.

(858)    However, in all  these  markets  the  Transaction  results  in  a  negligible  increment  due  to the small presence of Nuova Castelli  based  on  its  limited  volume  of  sales  or shares  and the  presence  of other  competitors  in  these markets.

(859)    On this basis the  Commission  finds that  the  Transaction  does  not  raise  serious doubts  concerning  these markets.

5.15. Spain

(860)    The Transaction results in  additional  affected  markets  in  Spain,  and  in  particular  in  the  plausible  markets  for   branded  cow  milk   mozzarella,   buffalo   milk   mozzarella and mascarpone, and  for the  overall (branded  and  private  label)  cow  milk mozzarella   and mascarpone.

(861)    However, in all  these  markets  the  Transaction  results  in  a  negligible  increment  due  to the small presence of  Nuova  Castelli,  bringing a  very  limited  increment  to Lactalis’   shares,  and the  presence  of other  competitors  in  these markets.

(862)    On this basis the  Commission  finds that  the  Transaction  does  not  raise  serious doubts  concerning  these markets.

6.  CONCLUSION

(863)    For the above reasons, the European Commission has decided not to  oppose  the  notified operation and  to  declare  it  compatible  with  the  internal  market.  This Decision is adopted in application of Article 6(1)(b) of the Merger  Regulation  and Article  57  of the  EEA Agreement.

1                  OJ L 24, 29.1.2004 p. 1. With effect from 1 December 2009, the Treaty on the Functioning of the European Union (‘TFEU’) has introduced certain changes, such as the replacement of ‘Community’ by ‘Union’ and ‘common market’ by ‘internal market’. The terminology of the TFEU will be used throughout this decision.

2                  OJ L 1, 3.1.1994,  p. 3 (the ‘EEA  Agreement’).

3                  Publication in the Official  Journal of the European Union No C 385,  13.11.2019,  p. 9.

4                           The same concentration was already notified to the Commission on 9.9.2019, but the notification was subsequently withdrawn on 10.10.2019.

5                  Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission Consolidated Jurisdictional Notice (OJ C95,  16.4.2008,  p. 1).

6                  The Parties’ activities also overlap in the supply of Italian-type cheese and related products to the industrial customers/out-of-home (‘OOH’) retail channel; however, based on the information  submitted by the Parties, these overlaps would not  lead  to  affected  markets  (see  Form  CO,  Section 6-2.5) and thus are not further discussed in this Decision.

7                  The activities of the Parties overlap in other areas; however, according to the data submitted by the Parties, these horizontal overlaps do not give rise to affected markets, and thus are not further discussed in this Decision.

8                           Commission Decision in Case M.7434 – Müller UK  &  Ireland/Dairy  Crest  Dairy  Operations, recital 10; Commission Decision in Case M.6627 – Arla Foods/Milch-Union Hocheifel, recital 17; Commission Decision in Case M.6611 – Arla Foods/ Milk Links, recital 10; Commission Decision in Case M.6441 – Senoble/Agrial/Senagral JV, recital 17.

9                           Commission Decision in Case M.6348 – Arla Foods/Allgäuland, recitals 13; Commission Decision in Case M.6119 – Arla/Hansa, recital 11.

10                       Commission  Decision in Case M.5875 – Lactalis/Puleva, recital 17.

11                       Commission  Decision in Case M.6242 – Lactalis/Parmalat, recital 13.

12                       Commission Decision in Case M.8549 – Lactalis/Omira, recital 11; Commission Decision in Case M.7573 – DMK/DOC KAAS, recital 15; Commission Decision in Case M.6441 – Senoble/Agrial/Senagral JV, recital 16.

13                        […].

14                        […].

15                        Form CO, paragraphs 120  and 121.

16                       Form CO, paragraph 121.

17                       Form CO, paragraph 342.

18                Form CO, paragraph 288; Commission  Decision in Case M.4135 – Lactalis/Galbani, fotenote 8.

19               Commission Decision in Case M.6722 – Friesland Campina/Zijerveld & Veldhuyzen and den Hollander, recital 20; Commission Decision in Case M.6611 – Arla foods/Milk link , recitals 36; Commission Decision in Case M.6242 – Lactalis/Parmalat, recitals 51-53.

20               Commission Decision in Case M.4135 – Lactalis/Galbani, recital 12; Commission Decision in Case M.7573 – DMK/Doc Kaas, recital 24; Commission Decision in Case M.6611 – Arla foods/Milk link , recital 36; Commission Decision in Case M.4761 – Bongrain/Sodiaal/JV, recital 23, Commission Decision in Case M.6242 – Lactalis/Parmalat, recitals 52-53. In previous cases, the Commission also assessed and left open whether cheese categories could be further segmented by type of presentation (such as sliced cheese, cheese sold at variable and fixed weight) (see for example Commission Decision in Case M.6611 – Arla foods/Milk link , recital 36). The sales of the Parties include variable and fixed weight sales. In this Decision, a segmentation by type of presentation is unlikely to substantially change the assessment of the Transaction given that the majority of the sales of Parties are in fixed  weight. Therefore, it will  not be addressed further in this decision.

21                       Commission  Decision in Case M.4135 – Lactalis/Galbani, recitals 12 and 13.

22               Commission Decision in Case M.4135 – Lactalis/Galbani, recital 12; Commission  Decision  in  M.7573  –  DMK/Doc  Kaas,  recital  24;  Commission  Decision  in  M.6611  –  Arla  foods/Milk  link ,

recital 36;    M.4761   –   Bongrain/Sodiaal/JV,   recital   23,   Commission   Decision   in    M.6242    –

Lactalis/Parmalat, recitals 52-53.

23                       Commission Decision in Case M.4135 – Lactalis/Galbani, recital 13.

24               Commission Decision in M.6611 – Arla foods/Milk link , recitals 39-40.

25                       Commission  Decision in Case M.4135 – Lactalis/Galbani, recitals 14 and 15.

26                       Form CO, paragraphs 207  and 258.

27                       Form CO, paragraph 258.

28                       Form CO, paragraph 258.

29                       Form CO, paragraph 300.

30                       Form CO, paragraph 207.

31               Form CO, paragraph 188 et seq.

32                       Form CO, paragraph 205.

33                       Form CO, paragraph 206.

34               Form CO, paragaraph 261 et seq.

35                       Form CO, paragraph 244.

36               Form CO, paragraph 271. The Notifying Party submits that the Parties  “do not manufacture and supply cheeses with the same PDO. Nuova Castelli supplies (as branded products) Mozzarella di Bufala Campana, under the Mandara brand, Parmigiano Reggiano, Grana Padano, Gorgonzola, Taleggio and Pecorino under the Nuova Castelli brand, none of which Lactalis manufactures or supplies as PDO products.” As regards Gorgonzola, Lactalis sells only very small quantities.

37               Form CO, paragraph 241 et seq.

38                       Form CO, pages 77 and 78.

39                       Form CO, pages 78 and 79.

40                Questionnaire to customers (Q2), question 9.

41                       Questionnaire to customers (Q2), question 12.

42                       Questionnaire to customers (Q2), question 12.1.

43                       Questionnaire to customers (Q2), question 12.1.

44                       Questionnaire to customers (Q2), question 15; Questionnaire to competitors (Q1), question 19.

45                       Courtesy translation from French: “La qualité du produit est supérieure en lait de bufflonne. Le gout est plus prononcé. Le prix est supérieur. Beaucoup de consommateurs de mozzarella di bufala n'achète pas de mozzarella au lait de vache car trouve le produit insipide et sans intérêt”, Questionnaire to customers (Q2), question 15.1.

46                       Questionnaire to customers (Q2), question 17; Questionnaire to competitors (Q1), question 22.

47                       Questionnaire to customers (Q2), question 16.

48                       Questionnaire to competitors (Q1), questions 20 and 21.

49                       Questionnaire to competitors (Q1), question 19; Questionnaire to customers (Q2), question 15.

50               Questionnaire to customers (Q2), question 37.1: “DOP is a sort of quality insurance which customers pay attention to”, “Par exemple, l'origine de la matière première du Lait de vache (Italie) est un critère important pour le client.”

51                       Questionnaire to customers (Q2), question 37.

52                       Questionnaire to customers (Q2), question 38.

53                       Questionnaire to competitors (Q1), question 33.

54                       Questionnaire to customers (Q2), question 11; Questionnaire to competitors (Q1), question 35.

55                       Questionnaire to customers (Q2), question 13.

56                       Questionnaire to customers (Q2), question 21.1.

57                       Questionnaire to customers (Q2), question 21.

58                       Questionnaire to customers (Q2), question 18.

59                       Questionnaire to competitors (Q1), question 23.

60                Form CO, paragraphs 1054 et seq.; Questionnaire to customers (Q2), questions 22.1

61                       Questionnaire to competitors (Q1), question 25.

62               Questionnaire to customers (Q2), questions 22 and  22.2;  Questionnaire  to  competitors  (Q1), question 26.

63                       Questionnaire to customers (Q2), question 11.

64                       Questionnaire to customers (Q2), question 21.

65                       Questionnaire to customers (Q2), question 19.

66                       Questionnaire to competitors (Q2), question 20; Questionnaire to competitors (Q1), question 24.

67                Form CO, paragraphs 1054 et seq.; Questionnaire to customers (Q2), questions 22.1

68                       Questionnaire to competitors (Q1), question 25.

69               Questionnaire to customers (Q2), questions 22 and  22.2;  Questionnaire  to  competitors  (Q1), question 26.

70                       Questionnaire to customers (Q2), question 11.

71                       Questionnaire to customers (Q2), question 29.

72                       Courtesy translation from French: “Beaucoup de produits alternatifs peuvent être substitués à la Feta, notamment pour des utilisations en salade”, Questionnaire to customers (Q2), question 29.1.

73                       Courtesy translation from French: “[l]a Feta et la mozzarella peuvent être 2 alternatives dans de nombreuses occasion de consommation comme par exemple dans la composition de salade. […]”, Questionnaire to customers (Q2), question 29.1.

74                       Courtesy translation from French: “[l]a Feta est principalement utilisée pour les salades. Elle est substituable avec d'autres fromages”, Questionnaire to customers (Q2), question 29.1.

75                       Questionnaire to competitors (Q1), question 31.

76                       Questionnaire to customers (Q2), question 37.

77                       Questionnaire to customers (Q2), question 38; Questionnaire to competitors (Q1), question 33.

78                       Questionnaire to customers (Q2), question 23.

79                       Questionnaire to customers (Q2), question 23.1.

80                       Questionnaire to competitors (Q1), question 27.

81                       Questionnaire to customers (Q2), question 24.

82                       Questionnaire to customers (Q2), question 37.

83                       Questionnaire to competitors (Q1), question 33.

84                       Questionnaire to customers (Q2), question 38.

85                        Form CO, paragraphs 272-274.

86               Form CO, paragraph 279. According to the Notifying Party, Lactalis has a residual role as a seasoner (i.e. for aging the cheese) in Consorzio Tutela Grana Padano.

87                       Questionnaire to customers (Q2),  questions 25, 25.1 and 27.

88                       Questionnaire to customers (Q2), questions 25.1.

89                       Questionnaire to customers (Q2), questions 25.1.

90                       Questionnaire to customers (Q2), questions 25.1.

91                       Courtesy translation from French: “Le Grana Padano fournit une alternative. D'autres produits à pâte pressée également, pour certains utilisateurs (qui râpent le produit par exemple)” ; Questionnaire to customers (Q2), questions 25.1.

92                       Questionnaire to customers (Q2), questions 26 and 26.1;  Questionnaire  to  competitors  (Q1), questions 28 and 28.1.; Questionnaire to customers (Q2), question 28; Questionnaire to competitors (Q1),  questions 29.

93                       Questionnaire to competitors (Q1), questions 29.1 and 30.

94                       Questionnaire to customers (Q2), questions 26.1 and 28.1; Questionnaire to competitors (Q1), questions 28.1 and 29.1.

95                       Questionnaire to customers (Q2), questions 37 and 38.

96               Questionnaire to customers (Q2), question 38.

97                       Questionnaire to competitors (Q1), question 33.

98                       Questionnaire to customers (Q2), questions 26.1 and question 25.1.

99                       Questionnaire to customers (Q2), question 27.1.

100                    Commission Decisions in Case M.6242 – Lactalis/Parmalat,  recital 26;  Commission  Decisions  in Case M.5046 – Friesland Foods/Campina, recital 529; Commission Decisions in Case M.4135 - Lactalis/Galbani, recital 16.

101                    Form CO, paragraph 182.

102                    Form CO, Section 2.1.1.

103                    Form CO, Section 2.1.2.

104             Form CO, paragraphs 188  et seq.

105             Form CO, paragraphs 190  et seq.

106             Questionnaire to customers (Q2), questions 30  and  31;  Questionnaire  to competitors (Q1),  question 32.

107                    Questionnaire to customers (Q2), question 33.

108                    Courtesy translation from French: “en termes de texture, goût et odeur les privat labels et branded labels sont équivalents; le prix des branded labels est généralement plus élevé”; Questionnaire to customers (Q2), question 31.1.

109                    Questionnaire to customers (Q2), question 50.

110                    Questionnaire to customers (Q2), question 50.

111                    Questionnaire to customers (Q2), question 51.

112                    Courtesy translation from French “Galbani est un incontournable de la mozzarella au lait de vache […]. Il est aussi très important sur la mozzarella au lait de bufflonne, la ricotta et le mascarpone”; Questionnaire to customers (Q2), question 51.1.

113                    Questionnaire to customers (Q2), question 51.1.

114              Form CO, Annex 5.2.D.,  slide 5.

115                    See, for example,  Questionnaire to customers (Q2), question 32.1.

116                    Questionnaire to customers (Q2), questions 5, 5.1, 33 and 34.1.

117                    Questionnaire to customers (Q2), questions 35 and 36.

118                    Questionnaire to customers (Q2), question 51.

119                    See, for example,  Form CO, Annex 6.1.2.1.5.A;  and Questionnaire to customers (Q2), question 53.

120                    Questionnaire to customers (Q2b),  question  4;  see also Questionnaire to customers (Q2), questions 75, 78, 78.2; Questionnaire to competitors (Q1),  question 88.1.

121             Questionnaire to customers (Q2), question 32. In addition, as tender specifications provided in the file indicate certain private label products seem to be benchmarked against a specific branded product, (Form CO, Annex 6.1.2.1.5  A). [.

122             Parties’  response  to  the  Commission’s  request  for  information  RFI  13,  annexes  13-7-5,  slide 14;

13-6-4, slide 12.

123              Parties’ response to the Commission’s  request for information RFI 13, annex 13-7-5,  Slide 7.

124             Strengths-weaknesses-opportunities-threats   analysis.

125                    Parties’ response to the Commission’s  request for information RFI 13, annex 13-7-5,  Slide 26.

126             Form CO, paragraph 122, Parties’ response to the Commission’s request for information RFI 13, question 7, explaining “This is proof that Lactalis is under stringent competitive pressure from the private label products”. Given that private labels are considered “competitors” in the internal documents, see for example Annex 13-7-1, slide 14, “careful price management considering competitors’ index”, and 13-7-3,  slide 10, “reducing our price gap Vs. competitor”.

127             Form CO, Annex 5.4.G, referring to the multiple European countries, for example, slide 6 (mozzarella with reference to Germany, France, UK, Poland, Belgium, Spain, Sweden, Portugal, etc.: “[Private label] MS growing everywhere”); slide 10 (mascarpone with reference to Germany, France, Portugal, Sweden, etc.: to the advantage of [Private labels] that reaches 69% MS).

128                    Third-party data show that the share of private label in the overall market was increasing in the period of 2016-2018, in some countries, for example, regarding cow mozzarella  in Germany, Sweden; ricotta in France, the UK, Italy; Italian-type hard cheeses in France, the UK, Sweden; Parties’ response to the Commission’s  request for information RFI 23.

129                    Form CO, paragraph 192.

130                    […].

131                    Form CO, paragraph 85.

132                    Commission Decision in Case M.6522 – Groupe Lactalis/Skanemejerier, recital 9; M.5046  –  Friesland Foods/Campina, recital 141.

133                    Commission Decision in Case M.6441 – Senoble/Agrial/Senagral JV, recital 45;  Commission  Decision in Case M.5046 – Friesland Foods/Campina, recitals 1225 - 1228.

134                    Commission Decision in Case M.6522 – Groupe Lactalis/Skanemejerier, recital 139; Commission Decision in Case M.5046 – Friesland Foods/Campina, recital 167.

135              Commission Decision in Case M.6722 – Frieslandcampina/Zijerveld & Veldhuyzen And Den Hollander, recital 101 et seq.; Commission Decision in Case M.6522 – Groupe  Lactalis/Skanemejerier, recital 14; Commission Decision in Case M.5046  – Friesland Foods/Campina,  recital1272.

136                    Form CO, paragraphs 390-394.

137                    Form CO, paragraph 390.

138                    Form CO, paragraph 391.

139                    Commission Decision in Case M.6722– Frieslandcampina/Zijerveld & Veldhuyzen And Den Hollander, recitals 109-112.

140                    Commission Decision in Case M.6119 – Arla/Hansa, recital 29; Commission Decision  in  Case  M.5046 – Friesland Foods/Campina, recitals 824 - 825.

141                    Commission Decision in Case M.5046– Friesland Foods Campina, recital 834.

142                    Commission  Decision in Case M.6119  – Arla/Hans, paragraph 30.

143                    Commission Decision in Case M.6722 – FrieslandCampina/Zijerveld & Veldhuyzen and Den Hollander, paragraph 112.

144                    Form CO, paragraphs 402-403.

145                    Form CO, paragraph 407.

146                    Commission Decision in Case M.6119 – Arla/Hansa, recital 35; M.6611 – Arla Foods/Milk Link , recital 54.

147             Commission  Decision in Case M.6242 – Lactalis/Parmalat, recital 30 et seq..

148                    Form CO, paragraph 130.

149                    Form CO, paragraphs 131-140.

150             Commission Decision in Case M.7232 – Charterhouse/Nuova Castelli, recital 15; Commission Decision in Case M.6522 – Groupe Lactalis/Skanemejerier, recital 28; Commission Decision in Case M.4135 – Lactalis/Galbani, recital 18; Commission Decision in Case M.6242 – Lactalis/Parmalat, recital 55.

151                    Form CO, paragraph 305.

152             Form CO, paragraphs 219  et seq.

153                    Questionnaire to customers (Q2), questions 41 and 42.

154                    Questionnaire to customers (Q2), question 43.

155                    Questionnaire to customers (Q2), question 44.

156                    Questionnaire to competitors (Q1), question 40.

157                    Questionnaire to customers (Q2), question 45. Questionnaire to competitors (Q1), question 41.

158                    Commission Decision in Case M.6119 – Arla/Hansa, recital 36; Commission Decision  in  Case  M.5046 – Friesland Foods/Campina, recital 230.

159                    Commission Decision in Case M.6722 – Frieslandcampina/Zijerveld & Veldhuyzen And Den Hollander, recitals 106-108.

160                    Form CO, paragraph 295.

161                    Commission  Decision in Case M.6627 – Arla Foods/Milch-Union Hocheifel, recital 88.

162             Commission  Decision in Case M.6627 – Arla Foods/Milch-Union Hocheifel, recital 88.

163                    Form CO, paragraph 307.

164             OJ C 31, 05.02.2004, p. 5. The remainder of this decision focuses on non-coordinated effects.

165             Horizontal Merger Guidelines, paragraphs 24-38.

166             Horizontal Merger Guidelines, paragraphs 24-38.

167                    In order to estimate the total market size at wholesale level, the Notifying Party removed the retailers’ margin from the total retail value, as recorded by the panels. The Notifying Party assumed that the retailers’ margins on Parties’ products are representative of their margins for the same cheese category. Briefing Memorandum, submitted by Analysis Group on 2019 October 23.

168              Panel data was missing for a number of markets. The Notifying Party claimed that given the lack of information, market value estimations were uncertain, and the value market shares provided for these markets are less reliable than volume market shares. The  Commission  only took into account the value market shares based on third-party panel data. Parties’ response to Commission’s request for information  RFI 26, question 1.1.

169                    For example, this concerns Italian-type hard cheese in Poland (Parties’ response to Commission’s request for information RFI 14); cow milk mozzarella, Feta, Italian-type hard cheese in  Finland  (Parties’ response to Commission’s request for information RFI 22).

170                    This concerns Buffalo Mozzarella in Denmark, Poland; Italian-type hard cheese in Germany, Parties’ response to Commission’s request for information RFI 14.

171             The Notifying Party counted the consumption as a difference between imports and exports under the conservative assumption that no production takes place internally in the country of interest. The Notifying Party then assumed that 50% of all consumption takes place OOH, which provides a market size estimate for retail sector. This assumption is conservative; a 2018 document prepared for the French parliament indicates that OOH consumption represents 40% of all cheese volumes. The following methodology was applied to: Feta in Poland and Portugal; cow milk mozzarella in Bulgaria and Greece; buffalo mozzarella, Italian-type hard cheese, ricotta and mascarpone in Greece; Italian- type hard cheese in Bulgaria, Hungary and Malta. Parties’ response to Commission’s request for information  RFI 22, Annex RFI 22-1-I.

172             The Notifying Party used the per capita consumption in other countries as a proxy. For example, missing markets for Finland were estimated using the per capita consumption in Denmark  and Sweden. The following methodology was applied to buffalo milk mozzarella, Gorgonzola, mascarpone, ricotta in Finland; Italian-type hard cheese in the Netherlands, Bulgaria and Hungary. Parties’ response to Commission’s request for information RFI 22, Annex RFI 22-1-I.

173                    For example, this concerns Italian-type hard cheese in Belgium. Parties’ response to Commission’s request for information RFI 22.

174              Parties’ response to Commission’s  request for information RFI 11, question 1.

175                    Parties’ response to Commission’s  request for information RFI 11, question 1.10.

176                    Parties’ response to Commission’s  request for information RFI 11, question 1.11.

177             For example, this concerns private label supply of ricotta in the UK, where the combined  market shares provided by the Notifying Party are exceeding 100%, but the Notifying Party submitted that other players are active in private label supply of ricotta, and another private label supply provider was identified during the market investigation.

178             This is a conservative assumption because the assessment of the private and label markets combined disregards the fact that some of the private sales are used by retailers internally. Although they are not reflected in the estimated market size, all private label sales of the Parties are included when determining the market shares.

179              In line with the product market definition, the Commission assessed Italian-type hard cheeses as one market. The market shares were based on all the Parties’ sales of Italian-type hard  cheese. For Lactalis, they include Parmigiano Reggiano DOP, Grana Padano DOP, Gran Gusto (Parmigiano- and Grana-type cheese, without DOP) and other Hard Cheese. For Nuova Castelli, they  include Parmigiano Reggiano DOP, Grana Padano DOP, Gran Castelli (Parmigiano- and Grana-type cheese, without DOP), Pecorino Romano DOP, Pecorino and other Hard Cheese. Parties’ response to Commission’s  request for information RFI  14, question 1.1.

180                    Parties’ response to Commission’s request for information RFI 23, Annex RFI 23-1.

181             Parties’ response to Commission’s  request for information RFI 11, question 1.2.

182             Parties’ response to Commission’s request for information RFI 22, Annex 2019-11-18 - Country volume market shares.

183             The multiplier of […] was used to account for the fact the panels do not cover all market. The Commission used the same multiplier as suggested by the Notifying Party for the market share estimation, as explained above.

184             The combined value market shares for branded segment are lower than the volume shares provided by the Parties, but both still overstate the Parties’ position compared to panel data.

185              Parties’ response to Commission’s  request for information RFI 7, question 1.

186                    Questionnaire to customers (Q2), question 66.

187                    Parties’ response to Commission’s request for information RFI 22.

188                    Questionnaire to customers (Q2), question 70.

189             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

190             Parties’ submission “Briefing  Memorandum on Mozzarella”, dated 23.10.2019,  Annex 4-A.

191                    Horizontal Merger Guidelines, paragraph 33.

192                    Horizontal Merger Guidelines, paragraph 32.

193             Parties’ submission “Briefing memorandum No 3” dated 20 November 2019, paragraph 23, which includes dry mozzarella  and mozzarella  in brine.

194             Non-confidential minutes of a call with a competitor, 23 October 2019; Non-confidential minutes of a call with a competitor, 5 November2019.

195                    Questionnaire to customers (Q2), question 78.

196                    Questionnaire to competitors (Q1), question 60.

197                    Questionnaire to competitors (Q1b), question 10.

198             Non-confidential minutes of a call with a competitor, 23 October 2019; Non-confidential minutes of a call with a competitor, 5 November2019.

199                    Form CO, paragraphs 435  and 436.

200                    Questionnaire to customers (Q2), question 73.

201             Questionnaire to customers (Q2), question 72.

202                    Questionnaire to customers (Q2), question 123.

203                     Questionnaire to customers (Q2), question 125.

204             The combined value    market shares for branded segment are in line with the volume shares provided by the Parties, and both underestimate the Parties’ position compared to panel data.

205                    Questionnaire to customers (Q2), questions 66 and 70.

206             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

207                    Questionnaire to customers (Q2), question 78.2.

208                    Questionnaire to customers (Q2), question 78.2.

209                    Questionnaire to customers (Q2), questions 66 and 70.

210                    Questionnaire to customers (Q2), questions 66 and 70.

211                    Questionnaire to customers (Q2), question 73.

212                    Questionnaire to customers (Q2), question 72.

213                    Questionnaire to competitors (Q1), question 88; Questionnaire to customers (Q2), question 78.

214                    Questionnaire to customers (Q2), question 123. See also non-confidential version of minutes of a call with a strategic market  participant, 22 July 2019.

215             The combined value market shares for branded segment are higher (by less than 7 percentage points) than the volume shares provided by the Parties, and both overstate the Parties’ position compared to panel data.

216                    Non-confidential version of minutes of a call with a third party, 24 July 2019.

217                    Questionnaire to customers (Q2), question 98.

218             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate  the Parties’ presence in private label products.

219                    Non-confidential version of minutes of a call with a third party, 24 July 2019.

220                    Horizontal Merger Guidelines, paragraph 33.

221              Horizontal Merger Guidelines, paragraph 32

222                    Questionnaire to customers (Q2), question 105.

223                    Questionnaire to competitors (Q1), question 124.

224                    Courtesy translation from Italian: “…non ritiene che l’Acquisizione avra’ un impatto negativo […] sul mercato del  Gorgonzola”,  Non-confidential  version  of  minutes  of a  call with  a  third  party, 24 July 2019.

225             Courtesy translation from Italian: “…ma una piccola impresa per quanto riguarda il   gorgonzola”,

Non-confidential version of minutes of a call with a third party, 24 July 2019.

226                    Questionnaire to customers (Q2), question 123.

227                    Questionnaire to customers (Q2), question 125.

228             The combined value market shares for branded segment are in line with the volume shares provided by the Parties, but both still slightly overstate the Parties’ position compared to panel data.

229                    Questionnaire to customers (Q2), question 84.1.

230                    Questionnaire to competitors (Q1), question 100; Questionnaire to customers (Q2), question 83.

231                    Questionnaire to customers (Q2), question 84.2.

232             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

233                    Questionnaire to customers (Q2), questions 81 and 82.

234                    Questionnaire to competitors (Q1), question 100; Questionnaire to customers (Q2), question 83.

235                    Questionnaire to competitors (Q1), question 15.

236                    Questionnaire to competitors (Q1), question 15.1.

237                    Questionnaire to competitors (Q1), questions 101 and 101.1.

238                    Questionnaire to competitors (Q1), question 102.1.

239                    Questionnaire to customers (Q2), question 87.

240                    Questionnaire to customers (Q2), question 124; Questionnaire to competitors (Q1), question 104.

241                    Questionnaire to competitors (Q1), question 104.

242                    Form CO, paragraph 435.

243                    Form CO, paragraph 436.

244                    Form CO, paragraph 436.

245                    Form CO, paragraph 436.

246                    Form CO, paragraph 441.

247                    Form CO, paragraph 444.

248             The combined value market shares for branded segment are higher (by 5 percentage points) than the volume shares provided by the Parties, and both overstate the Parties’ position compared to panel data.

249             Courtesy  translation  from French: "  La  marque  Castelli est sur le marché français confidentielle",

Questionnaire to customers (Q2), question 59.

250                    Courtesy translation from French: "Galbani a une notoriété bien supérieure à celle de Castelli qui n'est pas connu en France en Marque Nationale", Questionnaire to customers (Q2), question 67.1.

251                    Courtesy translation from French: "Ce ne sont pas de réels concurrents pour nous. Castelli est plutôt en concurrence avec des fournisseurs comme Granarolo ou Ambrosi."; Questionnaire to customers (Q2),  question 67.1.

252                    Questionnaire to customers (Q2), question 50.

253                    Based on panel data, Parties’ response to Commission’s request for information RFI 23.

254              Questionnaire to customers (Q2), question 4.1.

255              Questionnaire to customers (Q2), question 5.1.

256             For the reasons  explained  in  Section  5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

257                    Questionnaire to customers (Q2), question 63.1.

258                    Questionnaire to customers (Q2), question 63.1.

259                    Courtesy translation from French: "C’est un produit typique et le made in italy offre un avantage certain",Questionnaire to customers (Q2), question 63.1.

260                    Courtesy translation from French: "Le "made in Italy" n'est pas important sur la mozzarella de vache", Questionnaire to customers (Q2), question 63.1.

261              Questionnaire to customers (Q2b), question 9.

262                    Form CO, paragraph 215.

263                    Form CO, paragraph 232.

264             http://www.grupposabelli.it/il-gruppo.php.

265                    Questionnaire to customers (Q2), question 70.

266              Parties’ submission “Briefing Memorandum No 3”, dated 20.11.2019.

267                    Form CO, paragraph 360.

268              Parties’ submission “Briefing Memorandum No 3”, dated 20.11.2019

269              Questionnaire to customers (Q2b), question 9.

270                    Form CO, paragraph 993.

271             Parties’ submission “Briefing Memorandum No 1”, dated 17.10.2019.

272             Questionnaire to competitors (Q1b), question 16.

273             Questionnaire to competitors (Q1b), question 16.1.

274             Questionnaire to competitors (Q1b), question 17.

275                    The Parties submissions “Briefing  Memorandum No 1” dated 17.10.2019.

276             Questionnaire to competitors (Q1b), question 21.

277                    Form CO, paragraph 941.

278             Questionnaire to customers (Q2b), question 13.

279             Parties’ submission “Briefing Memorandum No 1”, dated 17.10.2019.

280                    Form CO, paragraphs 1043  to 1045.

281                    Questionnaire to customers (Q2), question 72.

282                    Questionnaire to customers (Q2), question 72.1.

283                    Questionnaire to customers (Q2b), question 10.

284             The combined value market shares for branded segment are higher (by less than 5 percentage points) than the volume shares provided by the Parties, and both overestimate the Parties’ position compared to panel data.

285             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

286                    Form CO, paragraph 360.

287                    Form CO, paragraph 360.

288                    Form CO, paragraph 365.

289                    Questionnaire to competitors (Q1), question 88.

290             The combined value market shares for branded segment are higher (by 5 percentage points) than the volume shares provided by the Parties, but both still overstate the Parties’ position compared to panel data.

291                    Questionnaire to customers (Q2), question 84.1.

292                    Questionnaire to competitors (Q1), question 100; Questionniare to customers (Q2), question 83.

293                    Parties’ response to Commission’s request for information RFI 22, Annex RFI 22-2.

294                    Questionnaire to customers (Q2), question 84.2.

295             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

296                    Questionnaire to customers (Q2), questions 81 and 82.

297                    Questionnaire to competitors (Q1), question 100; Questionnaire to customers (Q2), question 83.

298                    Questionnaire to competitors (Q1), question 15.

299                    Questionnaire to competitors (Q1), question 15.1.

300                    Questionnaire to competitors (Q1), questions 101 and 101.1.

301                    Questionnaire to customers (Q2), question 87.

302             The combined value market shares for branded segment are higher (by less than 5 percentage points) than the volume shares provided by the Parties, and both are in line with the Parties’ position compared to panel data.

303                    Questionnaire to customers (Q2), question 89 and 89.1.

304             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

305                    Questionnaire to customers (Q2), question 92.

306                    Courtesy translation from French: " Switch pour un nouveau mascarpone fabriqué en Espagne et plus économique ", Questionnaire to customers (Q2), question 90.1.

307                    Courtesy translation from French: "Cette année nous avons contractualisé directement avec […].", Questionnaire to customers (Q2), question 91.1.

308             As explained in Section 5.3.private label sales were reduced by […]  for computing the Adjusted market shares.

309                    Courtesy translation from French: " Il faut s'appuyer sur une logistique existante pour réduire les coûts de transport et de stockage en France ", Questionnaire to customers (Q2), question 96.1.

310             Courtesy translation from French: "Il serait très compliquer de livrer uniquement du mascarpone pour des raison logistique et d’intérêt de marque. Il est préférable d'avoir une gamme également de mozzarella et/ou ricotta et/ou pâtes dures" Questionnaire to customers (Q2), question 96.1.

311                    Form CO, paragraph 726.

312                    Form CO, paragraph 727.

313                    Courtesy translation from French: "Cette année nous avons contractualisé directement avec […].", Questionnaire to customers (Q2), question 91.1.

314                    Questionnaire to customers (Q2), question 911.

315                    Non-confidential version of minutes of a call with a third party, 24 July 2019.

316                    Questionnaire to customers (Q2), question 98.

317                    Questionnaire to customers (Q2), question 70.

318             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

319                    Non-confidential version of minutes of a call with a third party, 24 July 2019.

320                    Horizontal Merger Guidelines, paragraph 33.

321              Horizontal Merger Guidelines, paragraph 32

322                    Questionnaire to customers (Q2), question 105.

323                    Questionnaire to competitors (Q1), question 124.

324                    Parties’ submission “Briefing  Memorandum No 1”, dated 17.10.2019,  paragraph 61.

325                    Questionnaire to customers (Q2), question 124.

326              Lactalis also produces fresh cheese in brine (such as Salakis), which is not Feta DOP.

327             The combined value market shares for branded segment are lower than the volume shares provided by the Parties, and both understate the Parties’ position compared to panel data.

328             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

329                    Questionnaire to customers (Q2), question 115.

330                    Questionnaire to customers (Q2), question 117.

331                    Questionnaire to customers (Q2), question 116.1.

332                    Questionnaire to competitors (Q1), question 121.

333                    Courtesy translation from French: “'Olympus démarche assez fortement le marché français, en particulier les MDD, avec des prix très bas. Il va continuer à gagner du terrain en France dans les 3 prochaines années”, Questionnaire to customers (Q2), question 122.1.

334                    Questionnaire to customers (Q2), question 115.

335             The combined value market shares for branded segment are lower than the volume shares provided by the Parties, and both understate the Parties’ position compared to panel data.

336             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

337              Form CO, paragraph 360, see also Parties’ response to  the  Commission’s  request for information  RFI 14, questions 1 and 5.

338                    Form CO, paragraph 365.

339             Courtesy translation from Italian: “Il valore del brand DOP è talmente forte che toglie "spazio" ai Brand privati e, indirettamente, stimola l'attenzione delle private labels”, Questionnaire (Q1), question 128.1.

340                    Questionnaire to customers (Q2), question 107.

341                    Courtesy translation from French: "Il y a beaucoup d'intervenants. Ce sont des produits valorisés dans lequel le coût de transport est faible. Il y a de gros volumes.", Questionnaire to customers (Q2), question 109.

342                    Parties’ response to Commission’s request for information RFI 22.

343             The value market shares for branded segment are in line with the volume shares provided by the Parties and both overstate the Parties’ position compared to panel data.

344              Parties’ submission “Briefing Memorandum No 3”, dated 20.11.2019.

345                    Questionnaire to customers (Q2), question 50.

346                    Questionnaire to customers (Q2), question 67.

347                    Non-confidential version of minutes of a call with a customer, 26 September 2019; see also Questionnaire to customers (Q2), question 68.1.

348                    Parties’ response to the Commission’s request for information RFI 22.

349                    Parties’ response to the Commission’s request for information RFI 22, see also Annex RFI 22-2-4, paragraph 56.

350                    Questionnaire to customers (Q2), question 70; Questionnaire to competitors (Q1), question 73; Non-confidential version of minutes of a call with a customer, 26 September 2019.

351              Questionnaire to customers (Q2), question 5.

352                    Questionnaire to customers (Q2), question 63.

353                    See, for example,  Non-confidential version of minutes of a call with a customer, 26 September 2019.

354                    Questionnaire to customers (Q2), question 63.1.

355                    Questionnaire to customers (Q2), question 13.

356             Questionnaire to customers (Q2), question73.

357                    Questionnaire to customers (Q2), question 73.1.

358                    Questionnaire to customers (Q2), question 72.

359                    Non-confidential version of minutes of a call with a customer, 26 September 2019.

360             Questionnaire to customers (Q2), question 75.2, all respondents expressing views mentioned price as the first criterion, followed by quality.

361                    Questionnaire to customers (Q2), question 74.2.

362              Questionnaire to customers (Q2b), question 4.

363              Questionnaire to customers (Q2b), questions 7 and 8.

364             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

365                    Questionnaire to customers (Q2), questions 124 and 125.1.

366                    Questionnaire to competitors (Q1), question 92.3.

367                    Horizontal Merger Guidelines, paragraph 33.

368                    Horizontal Merger Guidelines, paragraph 32.

369                    Parties’ submission “Briefing  memorandum No 3”, dated 20.11.2019,  paragraph 23.

370             Questionnaire to competitors (Q1b), questions 9-11.

371                    Questionnaire to competitors (Q1b), questions 11.4 and 11.3.

372                    Non-confidential version of minutes of a call with a competitor, 23 October 2019; Non-confidential version of minutes of a call with a competitor, 5 November 2019.

373             Form CO, paragraphs 1061-1062. See also Questionnaire to competitors (Q1b), question 10, where several manufacturers of cow mozzarella indicated having increased production of cow milk  mozzarella  significantly without capital expenditure in the last three years.

374                    Non-confidential version of minutes of a call with a customer, 26 September 2019.

375                    Non-confidential version of minutes of a call with a customer, 26 September 2019.

376                    Non-confidential version of minutes of a call with a customer, 26 September 2019.

377              Questionnaire to customers (Q2b), question 9.

378                    Questionnaire to competitors (Q1b), question 18.

379                    Questionnaire to competitors (Q1b), question 18.1.

380                    Questionnaire to competitors (Q1b), questions 17 and 18.

381             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

382                    Questionnaire to customers (Q2), question 50.

383                    Form CO, paragraph 360.

384                    Form CO, paragraph 359.

385                    Form CO, paragraph 360.

386                    Form CO, paragraph 365.

387                    Non-confidential version of minutes of a call with a customer, 26 September 2019.

388              Parties’ response to the Commission’s request for information RFI 23. Questionnaire to customers (Q2),  question 3.1.

389                    Questionnaire to customers (Q2), questions 124 and 125.1.

390                    Parties’ response to Commission’s  request for information RFI 22, Annex RFI 22-2-4,  paragraph 56.

391             Questionnairere to customers (Q2), questions 82 and 82.1.

392                    Questionnaire to customers (Q2), question 84.2.

393             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

394             As explained in Section 5.2.2, the Notifying Party used third-party panel data to establish the market size for private label supply. However, given that such panel data does not capture all retailers, and the Notifying Party considers that it is even less reliable for small product markets, it is likely that the market shares of Lactalis and Nuova Castelli are overstated. In view of this and despite high market shares, the Notifying Party submitted that based on their knowledge, other players are active in the private label supply of ricotta in the United Kingdom.

395                    Questionnaire to customers (Q2), question 84.2.

396                    Questionnaire to competitors (Q1), question 100; Questionnaire to customers (Q2), question 83.

397                    Questionnaire to customers (Q2), question 82.1.

398                    Questionnaire to competitors (Q1), question 15.

399                    Questionnaire to competitors (Q1), question 15.1.

400                    Questionnaire to customers (Q2), question 87.

401                    Questionnaire to customers (Q2), questions 124 and 125.1.

402                    Questionnaire to competitors (Q1), question 104.

403                    The Parties response to the Commission’s request for information RFI 22.

404             The value market shares for branded segment are in line with the volume shares provided by the Parties, and both overstate the Parties’ position compared to panel data.

405                    Non-confidential version of minutes of a call with a customer, 26 September 2019; see also Questionnaire Q2, question 99.1.

406                    Parties’ response to Commission’s request for information RFI 22.

407                    As explained in Section 5.2.2, the Notifying Party used third-party panel data to establish the market size for private label supply. However, given that such panel data does not capture all retailers, and the Notifying Party considers that it is even less reliable for small product markets, it is likely that the market shares of Lactalis and Nuova Castelli are overstated. In view of this and following the market share methodology proposed by the Notifying Party, the combined market share is [50-60]%. However, the Notifying Party believes that their market share is overstated and estimates that Sterilgarda is likely to have a leading market position, which is not in line with the estimated market share of other players (remaining [40-50]% of the market) using the Notifying Party’s market share methodology. Parties’ response to Commission’s request for information The Parties response to the Commission’s  request for information RFI  22 and Annex RFI 22-2-4,  paragraph 62.

408             Parties’ response to Commission’s request for information RFI 22  and  Annex  RFI 22-2-4,  paragraph 62.

409                    Questionnaire to customers (Q2), questions 92 and 93.2.

410             Questionnaire to customers (Q2), questions 91 and 91.1.

411             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

412                    Questionnaire to customers (Q2), question 92.

413                    Questionnaire to customers (Q2), question 96.

414                    Non-confidential version of minutes of a call with a customer, 26 September 2019.

415                    Parties’ response to Commission’s request for information RFI 23.

416                    Questionnaire to customers (Q2), questions 124 and 125.1.

417             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

418                    Non-confidential version of minutes of a call with a third party, 24 July 2019.

419                    Parties’ Briefing  Memorandum of 17October 2019 – Paragraph 61.

420                    Non-confidential version of minutes of a call with a customer, 26 September 2019.

421                    Questionnaire to customers (Q2), question 124.

422                    Courtesy translation from the Italian: “…non ritiene che l’Acquisizione avra’ un impatto negativo […] sul mercato del Gorgonzola”, Non-confidential version  of minutes of a call with a third party,  24 July 2019.

423             The combined value market shares for branded segment are slightly higher (by less than 5 percentage points) the volume shares provided by the Parties and overstate the Parties’ position compared to panel data.

424             Courtesy translation from the Italian: “Il valore del brand DOP è talmente forte che toglie "spazio" ai Brand privati e, indirettamente, stimola l'attenzione delle private labels”; Questionnaire (Q1), question 128.1.

425             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

Form CO, paragraph 360, see also Parties’ response to  the  Commission’s  request for information RFI 14, question 1, 5.

426                    Form CO, paragraph 365.

427                    Form CO, paragraph 359.

428                    Questionnaire to customers (Q2), question 107; Questionnaire to competitors (Q1), question 130.

429                    Questionnaire to competitors (Q1), question 130.

430              Form CO, Annex 5.2.H.

431                    Form CO, paragraph 1060.

432                    Questionnaire to customers (Q2), question 113

433                    Questionnaire to competitors (Q1), question 135.1.

434                    Questionnaire to customers (Q2), questions 124 and 125.1.

435                    Questionnaire to customers (Q2), question 18.

436             The combined value market shares for branded segment are slightly higher (less than 5 percentage points) the volume shares provided by the Parties.

437             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

438                    Form CO, paragraph 360.

439                    Form CO, paragraph 360.

440                    Form CO, paragraph 365.

441             The combined value market shares for branded segment are slightly higher (by less than 5 percentage points) than the volume shares provided by the Parties, and both overstate the Parties’ position compared to panel data.

442                    Questionnaire to customers (Q2), question 84.1.

443                    Questionnaire to competitors (Q1), question 100; Questionnaire to customers (Q2), question 83.

444             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

445                    Questionnaire to customers (Q2), questions 81 and 82.

446                    Questionnaire to competitors (Q1), question 100;

447                    Questionnaire to customers (Q2), question 83.

448                    Questionnaire to Competitors (Q1), questions 87 and 102.

449                    Questionnaire to competitors (Q1), question 15.

450                    Questionnaire to competitors (Q1), question 15.1.

451                    Questionnaire to competitors (Q1), question 102.1.

452                    Questionnaire to competitors (Q1), question 104.

453                    Questionnaire to customers (Q2), questions 123 and 124.

454             The combined value market shares for branded segment are higher (by less than 10  percentage points), but result in a smaller increment than the volume shares provided by the Parties, and both overstate the Parties’ position compared to panel data.

455             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

456                    Questionnaire to customers (Q2), question 92.

457                    Questionnaire to customers (Q2), question 89.

458             As explained in Section 5.3.private label sales were reduced by […]  for computing the Adjusted market shares.

459                    Questionnaire to customers (Q2), question 96.

460                    Questionnaire to customers (Q2), question 95.1.

461             The combined value market shares for branded segment are lower than the volume shares provided by the Parties, but both still overstate the Parties’ position compared to panel data.

462             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

463                    Questionnaire to customers (Q2b), question 10.

464              Questionnaire to customers (Q2),  questions 66 and 70; Questionnaire to customers (Q2b), question 3.

465              Questionnaire to customers (Q2b), questions 4 and 5.

466              Questionnaire to competitors (Q1b), question 9.

467                    Questionnaire to customers (Q2), question 18.

468                    Questionnaire to competitors (Q1b), questions 26.1 and 26.2.

469             The combined value market shares for branded segment are higher (by less than 10  percentage points), but result in the smaller increment compared to the volume shares provided by the Parties, and both overstate the Parties’ position compared to panel data.

470             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

471                    Questionniare to customers (Q2), question 81.

472                    Questionnaire to competitors (Q1), question 100; Questionniare to customers (Q2), question 83.

473                    Questionnaire to competitors (Q1), question 102.

474                    Questionniare to customers (Q2), question 87.

475                    Questionnaire to competitors (Q1), question 15.

476             Questionnaire to competitors (Q1), question 15.1.

477                    Questionnaire to customers (Q2), question 87.

478                    Questionnaire to customers (Q2), question 124; Questionnaire to competitors (Q1), question 104.

479                    Questionnaire to competitors (Q1), question 104.

480             The combined value market shares for branded segment are lower than the volume shares provided by the Parties, and both understate the Parties’ position compared to panel data.

481             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

482                    Non-confidential version of minutes of a call with a third party, 24 July 2019.

483                    Non-confidential version of minutes of a call with a third party DOP, 24 July 2019.

484                    Courtesy translation from the Italian: “…ma una piccola impresa per quanto riguarda il gorgonzola”, Non-confidential version of minutes of a call with a third party, 24 July 2019.

485                    Questionnaire to customers (Q2), question 105.

486                    Questionnaire to customers (Q2), question 101; Questionnaire to competitors (Q1), question 122.

487             Questionnaire to customers (Q2), question 124; Questionnaire to competitors (Q1b), questions 26.1 and 26.2.

488                    Parties’ response to Commission’s request for information RFI 22.

489                    Questionnaire to customers (Q2), question 50.

490                    Courtesy translation from Italian: “Il valore del brand DOP è talmente forte che toglie "spazio" ai Brand privati e, indirettamente, stimola l'attenzione delle private labels”; Questionnaire to competitors (Q1), question 128.1.

491                    Form CO, paragraph 1196.

492                    Questionnaire to competitors (Q1), question 133.

493                    Parties’ response to Commission’s request for information RFI 22.

494                    Form CO, paragraph 360.

495                    Form CO, paragraph 1060.

496                    Questionnaire to customers (Q2), question 113

497             Questionnaire to competitors (Q1), question135.1.

498                    Questionnaire to customers (Q2), question 124;  Questionnaire  to  competitors  (Q1), questions 140 and 141. Only one customer in Poland was concerned about the overall negative impact of the Transaction, however no substantiated concerns were formulated in relation to Italian-type hard cheeses (Questionnaire to customers (2b), question 18).

499                    Form CO, paragraph 436.

500                    Form CO, paragraph 436.

501                    Form CO, paragraph 436.

502             https://www.clal.it/en/index.php?section=quadro_europa&country=PL.

503                    Form CO, paragraph 437.

504                    Form CO, paragraph 174.

505                    Form CO, paragraph 174.

506             The combined value market shares for branded segment are slightly higher (by less than 5 percentage points) than the volume shares provided by the Parties, and both overestimate the Parties’ position compared to panel data.

507                    Form CO, paragraph 347.

508                    Questionnaire to customers (Q2), question 50.

509                    Questionnaire to customers (Q2), question 50.

510                    Questionnaire to customers (Q2), question 69.

511                    Questionnaire to customers (Q2), question 69.1.

512             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

513                    Parties’ response to the Commission’s request for information RFI 23.

514             Based on the market shares submitted by the Parties, the Nuova Castelli’s share in  the plausible private label segment would be [5-10]%, while Lactalis would bring an increment of less than [0-5]%, thereby not giving rise to an affected plausible market and indicating very limited presence of the Parties.

515                    Parties’ response to Commission’s request for information RFI 22.

516                    Questionnaire to customers (2), question 78.1.

517                    Questionnaire to customers (2), questions 70, 73.

518                    Questionnaire to customers (2), question 123.

519             The combined value market shares for branded segment are lower than the volume shares provided by the Parties, and are in line with the Parties’ position compared to panel data.

520                    Questionnaire to customers (2),  Question 113.1.

521                    Courtesy translation from the Italian: “Il valore del brand DOP è talmente forte che toglie "spazio" ai Brand privati e, indirettamente, stimola l'attenzione delle private labels”; Questionnare to competitors (Q1), question 128.1.

522             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

523                    Parties’ response to the Commission’s request for information RFI 23.

524                    Parties’ response to the Commission’s request for information RFI 22.

525                    Questionnaire to customers (2), question 107.

526                    Form CO, paragraph 360.

527                    Form CO, paragraph 1060.

528                    Questionnaire to customers (Q2), question 113

529                    Questionnaire to competitors (Q1), question 135.1.

530                    Questionnaire to customers (2), question 123.

531                    Questionnaire to customers (2), question 123.1.

532             The combined value market shares for branded segment are slightly higher (by less than 5 percentage points) than the volume shares provided by the Parties, but both underestimate the Parties’ position compared to panel data.

533              Questionnaire to customers (Q2), question 68.1

534             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

535                    Questionnaire to customers (Q2), question 66.

536              Questionnaire to customers (Q2b), questions 9.

537              Questionnaire to customers (Q2b), questions 9.

538                    Questionnaire to customers (Q2),  questions 69.

539                    Questionnaire to customers (Q2),  questions 123; Questionnaire to customers (Q2b), question 18.1.

540             The combined value market shares for branded segment are higher (by less than 7 percentage points) than the volume shares provided by the Parties, and both overestimate the Parties’ position compared to panel data.

541             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

542                    Questionnaire to customers (Q2), question 92.

543                    Questionnaire to customers (Q2), question 90.1.

544                    Questionnaire to customers (Q2), question 96.

545             The combined value market shares for branded segment are in line with the volume shares provided by the Parties, and are also in line with the Parties’ position compared to panel data.

546             Questionnaire to customers (Q2), question 107, where it is considered as top 1 supplier for Italian-  type hard cheese by a customer from Denmark expressing the views.

547                    Questionnaire to customers (Q2), question 107.

548             Courtesy translation from Italian: “Il valore del brand PDO è talmente forte che toglie "spazio" ai Brand privati e, indirettamente, stimola l'attenzione delle private labels”; Questionnaire to customers (Q1),  question 128.1.

549             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

550                    Questionnaire to customers (Q2), question 109.

551                    Questionnaire Q2, question 109.1.

552                    Parties’ response to Commission’s request for information RFI 22.

553                    Form CO, paragraph 1060.

554                    Questionnaire to customers (Q2), question 113

555                    Questionnaire to competitors (Q1), question 135.1.

556                    Non-confidential version of minutes of a call with a customer, 2 August 2019.

557                    Questionnaire to customers (Q2),  question 123; Questionnaire to customers (Q2b), question 18.1.

558             The combined value market shares for branded segment are slightly higher (by less than 5 percentage points) than the volume shares provided by the Parties, and both overestimate the Parties’ position compared to panel data.

559              Parties’ response to Commission’s  request for information RFI 7, question 1.

560              Questionnaire to customers (Q2c), question 3.

561             For the reasons explained in Section 5.2.2., the Commission  reports  the Adjusted market shares for the plausible market of branded goods, as well as for the branded and private label goods market combined. As detailed panel data for private label is unavailable, the separate shares for private label are presented on the basis of the Notifying Party’s market shares. They are likely to overestimate the Parties’ presence in private label products.

562                    Questionnaire to customers (Q2c), questions 11 and 12.

563                    Questionnaire to customers (Q2c), question 18.2.

564             The combined value market shares for branded segment are slightly higher (by less than 5 percentage points) than the volume shares provided by the Parties.

565             Parties’ response to the Commission’s  request for information RFI 20, Annex RFI 20-1  - Panel data.

566              Questionnaire to customers (Q2c), question 3.

567                    Questionnaire to customers (Q2c), question 18.1.