The High Court last month overturned the Competition Authority’s decision to block Kerry Group’s acquisition of Breeo Foods. The Authority has subsequently announced its intention to appeal this decision to the Supreme Court. Both companies are involved in the supply of food products; Kerry’s brands include Denny’s and Ballyfree, whereas Breeo uses the Galtee and Shaw’s labels.

In August 2008, the Authority blocked Kerry’s proposed acquisition of Breeo because it found the merger would substantially lessen competition in the processed cheese, rashers and non-poultry cooked meats markets. It was only the third merger to be blocked by the Authority. Kerry appealed this decision to the High Court.

In the High Court, the judge decided that the Authority’s basis for defining the product market for cheese was fundamentally flawed. In addition, the Court determined that the Authority failed to account properly for the effects of the bargaining power of major supermarket chains (so-called countervailing buyer power) in the rashers and non-poultry cooked meats markets. The Court said that the Authority had made a serious error in underestimating the likely strength of countervailing buyer power post-merger. Ultimately, the Court allowed the appeal and annulled the Authority’s decision. Kerry subsequently completed its acquisition of Breeo.

The Kerry/Breeo case is hugely significant since it was the first appeal against a prohibition merger decision by the Authority. The judgment offers valuable lessons for future notifications. Notifying parties will clearly need to be more rigorous both in their analysis of the likely relevant markets and in assessing the likely competitive effects of the relevant transaction.