The Competition Authority annuls Kaupfélag Skagfirðinga's purchase of Gunnars

The Competition Authority has, with its decision today, annulled the acquisition by the Co-operative Society
Skagfirðinga (KS) at Gunnars Ltd. The decision can be accessed here.

With KS's purchase of Gunnar's, two of the largest would have merged.
producers of mayonnaise and cold sauces in Iceland. Gunnars is, as is well known
is a strong brand in this product category and KS manufactures and distributes the same
product types under the E. Finnsson and, where applicable, Vogabæjar brands, as well as
Both parties also produce these products for other companies. Both parties
sell the same product lines to grocery stores and large-scale customers.

In the opinion of the Competition Authority, the merger would have had serious
Consequences for competition, to the detriment of customers and consumers. More
The harmful effects of the merger are specified to relate mainly to the following points:

• Dominant market position would have been created in specifically designated markets for pure mayonnaise
  and other prepared cold sauces, as further defined in the decision. Are the companies
  with a very strong position in the product markets concerned. Thus, the combined company would have become
  the largest company in the relevant markets and with a significant lead over
  its main competitor, Kernavörur. Then there are few manufacturers of mayonnaise.
  locally and that their number had been reduced by one due to the merger.
• The companies are close and important competitors. with
  the production and sale of pure mayonnaise and ready-made cold sauces. With the purchase of KS on
  Gunnars would therefore have a close and important rival disappear from the scene, and thus
  the competitive discipline that comes with it. Furthermore, barriers to entry exist
  places that hinder competition and make the entry of a strong competitor or expansion
  more unlikely than otherwise. Then the purchasing power of a few parties on
  The grocery market does not adequately counter the harmful effects of the merger.
  to stop.
• Harmful
  The exclusionary effects and vertical integration would have increased. Prior to the merger, Kaupfélag Skagfirðinga is vertically integrated.
  a company with diverse and extensive operations. With the merger, the scope
  the co-operative's consolidation and its vertical integration also increase. By virtue of
  increased integration and the position of the combined company in adjacent
  in the relevant product markets, the merger would have had harmful exclusionary effects for
  competition in remote markets, as detailed in the decision.

Background information

Ready
A merger notification was received on 19 July 2022, and a formal investigation was then initiated.
the merger. As the merger would lead to a high degree of concentration.
it was inevitable that he would be taken for a thorough examination. Was the merger partners
It was announced specifically.

After
A status meeting with the merger partners was held at the beginning of October as part of the extensive data collection.,
where they were given a reasoned account of the supervisory authority's preliminary assessment that
the merger would seriously harm competition. Have the merging parties in
in the next step, test the initial assessment by introducing further perspectives and
evidence was submitted. For that reason, the investigation into the merger was continued, given
issue a so-called statement of objections in which the authority's preliminary assessment is thoroughly justified and
the merger parties are given an opportunity to respond to it.

Mayonnaise and
Related products have been produced under the Gunnars brand name since the year
1960. The company has operated in its current form since 2014.

KS has
a multifaceted and extensive operation, but the company's main activity is food production.
The KS group and its operations consist of a meat processing plant, grocery stores,
building supply shop, garage, machine shop, and dairy co-operative and
KS's milk production. The company's operations also take place in its subsidiaries.
which are Bústólpi ehf., Esja Gæðafæði ehf., FISK Seafood ehf., Fóðurblandan hf.,
Fóðurfélagið ehf., Heilsuprótein ehf., Íslenskar sjávarafurðir ehf., Nýprent
ehf., Sláturhús Hellu hf., Sláturhús KVH ehf., Tengill ehf., Trésmiðjan Borg
ehf., Vogabær ehf., and Vörumiðlun ehf. The Co-operative is also a shareholder in
The Dairy Marketing Company Ltd.

During the proceedings, the parties have
The merger parties have neither requested conciliation nor submitted proposals for
possible conditions in a formal manner. Then the merger parties have in particular
stated that it is not based on the view that the merger should be approved
about a company on the verge of collapse.