ROMANIA: Lactalis to divest LaDorna butter to take over Covalact | Progresiv

The Competition Council has placed in public debated the commitments made by French group Lactalis to eliminate competition concerns identified in the context of the acquisition of Covalact SA and Lactate Harghita.

"Following the analysis, the competition authority found that the transaction could lead to the strengthening of Lactalis group's position on the butter production and trade market at national level. The Competition Council has expressed its competition concerns on this market regarding the reduction of consumers' choices", said a press release from the Competition.

Thus, Lactalis proposed the licensing of the LaDorna butter brand for a certain period of time to another company, independent of the French group, in correlation with its rebranding. After that period, the LaDorna butter brand will return to Lactalis group's portfolio, which will refrain from using that butter brand for a sufficient period of time for the third party to benefit from the increase in its market share.

Lactalis has confirmed the takeover of Covalact from Sigma Bleyzer investment fund at the end of 2016. This is the third acquisition of the French on the Romanian market after the takeover of LaDorna took from businessman Jean Valvis in 2008 and Albalact's acquisition earlier this year, which turned Lactalis into the leader of the local dairy market. In Romania, Lactalis also owns the Parmalat - the producer of Santal fruit juices - in 2011.

Covalact has 560 employees and two factories in Sfantu Gheorghe and Miercurea Ciuc, supplied each year with about 60 million liters of milk. Its biggest brands are Covalact de Tara and Friss, active on the following categories: yoghurt, cream, fresh milk, kefir, cheese and butter. The company ended 2016 with 230 million lei business, up by 15% over the previous year and reported a profit of 13 million lei, almost twice as high as in 2015, according to data from the Ministry of Finance.

Lactalis Group has several international brands, such as President, Parmalat, Galbani, having 200 factories in 43 countries and 75,000 employees. Last year, the group had a global turnover of 17 billion euros.