Concentration in veal sector: ACM clears acquisition of Van Dam by Van Drie

The Netherlands Authority for Consumers and Markets (ACM) has cleared the acquisition of the Dutch activities of veal company Van Dam by rival company Van Drie Group. Following an extensive investigation into the acquisition, ACM has determined that it is not likely that the acquisition will lead to lower purchase prices of calves or to foreclosure of competitors.

The Van Drie Group is active in the entire production chain in the veal sector. Van Drie’s main activities include the production of feed for calves, buying of young calves, calf husbandry, calf slaughterhouses, and the selling (export) of veal. The Van Drie Group is the market leader in the veal sector. Van Dam’s main activities include buying and selling calves, and calf husbandry.

Market study regarding prices, switching opportunities, and investments

ACM has assessed whether, after the acquisition, the leading market position of the Van Drie Group could result in a restriction of competition with adverse consequences. ACM has assessed whether, as a result of the acquisition, the Van Drie Group could lower the purchase prices it pays to dairy farmers and traders for their young calves. Lower prices can, particularly in the long term, lead to fewer investments in, for example, sustainability and animal welfare. However, it is unlikely that the acquisition will result in lower purchase prices. Dairy farmers and traders are able to switch to competitors.

ACM has also assessed whether, as a result of the acquisition, the Van Drie Group is able to lower the purchase price of fattened calves. That does not seem to be the case. In that case, suppliers of fatted calves, too, will be able to switch to competitors.

Although the Van Drie Group is already the market leader in the calf sector, this acquisition does not have any major consequences for competition in the entire veal production chain. It is not likely that the Van Drie Group is able to foreclose competitors from the market, for example, by temporarily raising its payments to dairy farmers and traders when buying calves.

ACM’s concentration control: mergers, acquisitions, and joint ventures

With any merger or acquisition, there is the question of whether sufficient competition will remain on that market, right after the transaction as well as in the future. Competition ensures that products are of high quality and that they are offered on the market at competitive prices. Competition also promotes innovation. That is why ACM decides in advance whether or not companies are allowed to merge or acquire another company. ACM assesses whether the markets involved will continue to work well for people and businesses, now and in the future.