In February, Kesko announced that on 17 February 2020, the Market Court approved a proposal by the Finnish Competition and Consumer Authority (FCCA) to prohibit the acquisition of the Heinon Tukku foodservice wholesale company. The relevance of the market definition was highlighted in the FCCA’s prohibition proposal. According to the proposal, generalist wholesalers such as Kespro and Heinon Tukku compete in the foodservice market only against other generalist wholesalers and that other operators are not considered as competitors in the market. According to the FCCA, Kespro's market share would have increased to as high as 60 per cent as a result of the acquisition. The Market Court decided to support the FCCA’s stance.
Kesko sees the operation and size of the foodservice market in a very different light. A large number of different suppliers compete in the foodservice market. In addition to generalist and specialist wholesalers, foodservice customers are served by countless other wholesalers, product manufacturers and importers, and the grocery stores. Kespro's share of this foodservice market after the acquisition would have been significantly lower than the FCCA’s estimate, well below 40 per cent.
The decision provided clear grounds for appeal to the Supreme Administrative Court. The Market Court accepted FCCA's very stringent stance on the market definition, which does not correspond with Kesko's view on the way in which the foodservice market functions. The Market Court decision is also very exceptional because it prohibits an acquisition for the first time. However, after considering the matter together with Heinon Tukku, Kesko has decided not to appeal the decision. The appeal and its long processing time would have further prolonged the already lengthy merger control process. This would have been very detrimental for Heinon Tukku's business and its staff in particular.
For further information, please contact:
Lasse Luukkainen, Group General Counsel, tel. +358 10 532 2818
K Group communications (Mon–Fri 8–16), tel. +358 10 535 0200, email@example.com