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EU opens probe into joint coffee venture

December 16, 2014

A leading Dutch coffee vendor and a US snack giant proposed to team up in May, hoping to take on other majors in the coffee business. But the European Commission is concerned what this might mean for consumers.

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cup of coffee and coffee beans
Image: Fotolia

European Union antitrust regulators opened an in-depth investigation on Monday into the proposed joint venture between leading Dutch coffee vendor Douwe Egberts Master Blenders 1753 and US snack heavyweight Mondelez.

The two companies announced plans for a merger in May, aiming to contend with other coffee industry majors like Nestle. The "world's leading pure-play coffee company" would be expected to have annual sales of more than $7 billion (5.6 billion euros).

But the European Commission is concerned the proposal would reduce competition in a key industry in multiple EU countries, including Austria, France, Denmark and Latvia.

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"This concentration of key local brands in the hands of one company increases the likelihood of price increases for retailers and ultimately for consumers, " the EC said in a statement.

The report added the two firms had offered to address the Commission's competition concerns, but their commitments were deemed "insufficient."

The $5 billion deal would bring together Mondelez's grocery coffee products and D.E. Master Blenders brands under one roof in a new Dutch-based venture called Jacobs Douwe Egberts.

D.E. Master Blenders is known for its popular Senseo brand and coffee pods, while Mondelez operates its own single-serve coffee system Tassimo.

The EC has until May 6, 2015 to reach a decision on the matter.

el/uhe (AFP, Reuters)