The Competition Authority is investigating the proposed acquisition by Hagar hf. („Hagar“) of Eldum rétt ehf. („Eldum rétt“). The transaction is subject to the merger rules of competition law, and the investigation is subject to statutory time limits. The matter originated from preliminary discussions between Hagar and the Competition Authority at the beginning of the year, with the merger notification received by the authority on 7 April 2022. The Competition Authority notified the parties of a further investigation into the merger's effects on competition in a letter dated 17 May 2022.
The Competition Authority's investigation into the merger's competitive effects has been extensive, but the Competition Authority has m.a. conducted a stakeholder survey and a consumer survey among customers of meal kit companies, in addition to an in-depth analysis of the data and information submitted with the merger notification and further data obtained during the case's proceedings.
Based on the above investigation and in accordance with procedural rules, the Competition Authority published an objection statement to the merger parties on 29 July 2022. The statement of objections contains the Authority's detailed preliminary assessment of the competitive effects of the proposed merger, concluding that the merger would be likely to impede competition and that there are grounds for intervention under Article 17(c) of the Competition Act. The preliminary assessment is presented in a non-binding manner in the statement of objections in order to facilitate the merging parties' exercise of their right of reply and to contribute to the adoption of a correct decision in the case.
In summary, the Competition Authority's preliminary assessment is that the merger of Haga and Eldum rétt will lead to a strengthening of Haga's dominant position in the grocery market, and likewise of Eldum rétt's dominant position in the relevant market for the online sale of combined meal packages. Thus, this is a merger of two dominant undertakings on related markets. If the sale of meal deals is included in the grocery market, the merger will also strengthen Haga's dominant position in that market.
Furthermore, it is the Competition Authority's preliminary assessment that Eldum rétt is a potential competitor of Hagur in the grocery market, and likewise that Hagur is a potential competitor of Eldum rétt in the likely market for combined meal deals. The Competition Authority's preliminary assessment is that the merger constitutes a merger of close competitors and that Eldum rétt is a significant competitor of Hagur in the grocery market. The combined company is likely to be able to prevent the expansion of its competitors. Furthermore, the Competition Authority's preliminary assessment is that there are significant barriers to entry into both the grocery market and the likely market for the retail sale of combined meal deals.
Ultimately, the Competition Authority's preliminary assessment is that Haga's vertical integration and purchasing power entail harmful vertical and conglomerate effects.
In a letter to the parties requesting views on the preliminary assessment and the merger parties' objections, which is available here,A more detailed summary of the Competition Authority's preliminary assessment, which was provided to the merging parties in a statement of objections, is available.
Hagar and Eldum responded to the above-mentioned objection document by submitting their views to the Competition Authority on 16 August 2022. In the submissions of both companies, the Competition Authority's preliminary assessment is contested in principle, and it is argued that the Competition Authority should amend its preliminary assessment in its final assessment of the merger's effects. Furthermore, the merging parties propose possible mitigating measures in light of the preliminary assessment.
Haga's views, without confidential information, are available here and the point of view of Eldum rétt here.
The Competition Authority has today sent the aforementioned letter to the main stakeholders, in which the Authority's preliminary assessment is outlined and their views are sought on the merger parties' objections to the statement of objections. The Competition Authority considers it appropriate to give everyone who wishes the opportunity to submit their views regarding the above. In the interests of the investigation, it is requested that views be submitted to the Competition Authority. by the end of the day on 5th September, by email to samkeppni@samkeppni.is.
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