Commission clears Kraft to buy Cadbury

EU authorities say sale of brands in two European markets would make merger acceptable.

The European Commission last night gave the US food company Kraft permission to buy the British confectioner Cadbury, provided it sells off Cadbury brands in Poland and Romania.

Neelie Kroes, the European competition commissioner, said she was satisfied that meeting this condition would ensure that the takeover – which has yet to be agreed – would “not adversely affect competition anywhere in Europe and that consumers would not be worse off”.

Kraft has launched a hostile takeover bid for Cadbury valued at €11.35 billion, but it is expected to submit an improved offer on 19 January.

Cadbury argues that the Kraft offer undervalues the company and is expecting to release new financial data on 15 January showing that the company performed strongly in 2009.

The Commission found that the acquisition would not harm competition in the UK and Irish markets, where Kraft products have a small share of the market because of consumers’ preferences for Cadbury brands.

The Commission found, however, that the combined market share of Kraft and Cadbury was high in Poland and Romania. The Commission asked Kraft to undertake to sell off its Wedel brand in Poland and the Cadbury brand in Romania.

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