Fine imposed against Mars for violating the prohibition to put a merger into effect

The Bundeskartellamt has imposed a fine totalling 4.5 million euros against the American company Mars Inc., McLean (Virginia) for violating the prohibition to put into effect its acquisition of the American pet food manufacturer Nutro Products, Inc., City of Industry/California. By completing its share acquisition Mars consciously defied provisions of German competition law. This was the first fine to be imposed for this category of competition law violation on the basis of the Bundeskartellamt's fine guidelines from the year 2006. This is the highest fine to be imposed by the Bundeskartellamt for a violation of the prohibition to put a merger into effect.

Mars is a manufacturer of pet food, confectionary (including the brand names Mars, Bounty, Milky Way, M&M’s) and foodstuffs. In Germany its pet food products are sold, among others, under the brand names Royal Canin, Pedigree, Frolic, Chappi, Cesar, Whiskas, Kitekat und Sheba. In terms of dog and cat food sales Mars is by far the leading supplier of these products in Germany.

Nutro Products is an American producer of dog and cat food which in Europe has up to now distributed its products under the brand name Nutro Choice via independent retailers to specialised pet supply shops. The company has all its production sites in the USA. Its activities are concentrated in North America.
In May 2007 Mars notified its intention to acquire Nutro Products to the authorities in Germany, Austria and the USA. After clearance of the project by the American authorities and during the period of ongoing examination by the German and Austrian authorities, Mars acquired the majority of the shares in Nutro Products. By acquiring Nutro Products‘ trademark rights and production sites, Mars took possession of all the assets necessary to enable it to compete successfully. These are also the essential elements of competition potential behind Nutro’s share of the domestic market. Only the distribution rights for Nutro products in Germany and Austria had initially been transferred to a company belonging to the seller. In autumn 2007 Mars abandoned its initial intention to acquire the German distribution company incorporated in this company after the expression of competition concerns regarding the sales market for dry dog food.

Mergers cannot be realized without the approval of the Bundeskartellamt.

In the Bundeskartellamt’s opinion the acquisition of Nutro would have strengthened Mars’ dominant position in the dry dog food market in Germany. By realizing its share acquisition Mars consciously defied provisions of German competition law. In calculating the level of the fine, the Bundeskartellamt took consideration of the fact that Mars had been cooperative in eliminating the ongoing domestic effects of the merger. This happened in the summer of 2008 with the sale of the trademark rights to Nutro for Germany and Austria to an independent manufacturer specialising in pet food, which was also granted a licence for formulas and manufacturing know-how.

The order to impose the fine is not yet final.