Analysis of the Kraft Food- Cadbury Merger

5625 Words Nov 3rd, 2010 23 Pages
Table of contents

I. Introduction 4
II. The case 5
III. Analysis: competitive assessment 6
1) Confectionery sector overview. 7
2) Relevant product market 9
3) Relevant geographic markets 11
4) Unilateral Effects 11
IV. Our results: pro-collusive effects and efficiency gains. 14
V. Conclusions 15
Bibliography 16

I. Introduction
Kraft is a worldwide food and beverage company active in more than 150 countries with annual revenues of $48 billion while Cadbury is a worldwide producer and seller of chocolate and sugar confectionery products in over 60 countries. As stated by the European Commission: “Both Kraft and Cadbury are strong players in the chocolate confectionary business in the European Economic Area. With its
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In addition, the parties have a combined aggregate worldwide turnover of more than EUR 5 billion, moreover, each of them has a communitywide turnover in excess of EUR 250 million but none of the two has more than two-third of their aggregate communitywide turnover within one and the same Member State. For these reasons, the case was considered to have a Community dimension and therefore, to be relevant.
The commission was not concerned about the entire activity of the two groups, but focused its attention on the chocolate confectionery market and to a lesser extent, on the sugar confectionery and chocolate drinks, where the two parties presented overlapping activities, large market shares, and in some Member States, namely Romania and Poland, the two were brands were regarded as close substitutes and no other similar products were registered in the reference market.
The commission based its decision on the results on various economic analysis and market research undertaken with the explicit purpose of assessing the market power of the two group before and after the merger.
On 7 December 2009 Kraft Food proposed a first commitment package in order to render the

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