EU Investigating Proposed Chocolate Acquisition

European Union authorities recently announced an investigation of a proposed deal between agribusiness giants Cargill and Archer Daniels Midland amid concerns over chocolate prices.

Minnesota-based Cargill last fall announced plans to purchase ADM's global chocolate business for $440 million and merge the operation with Cargill's cocoa and chocolate division. Six ADM chocolate plants would change hands in the deal: three in North America -- in Milwaukee, Hazelton, Pennsylvania and Georgetown, Ontario -- and three in Europe, located in the U.K., Belgium and Germany.

Bryan Wurscher, president of Cargill Cocoa and Chocolate North America, called the acquisition "a major milestone in Cargill’s chocolate growth strategy."

The European Commission, however, reported this week that an initial inquiry found "potential competition concerns in the supply of industrial chocolate to customers in Germany and the U.K.”

Cargill, ADM and Switzerland-based Barry Callebaut supply much of the industrial chocolate in those nations, and some chocolatiers expressed concern that eliminating one of those competitors could spark price increases that would be passed on to consumers.

The commission, the EU's antitrust authority, characterized the industrial chocolate market as "already concentrated" among a select few companies.

Cargill and ADM officials indicated they would work to address the EU's concerns. The companies expected to close the deal on July 1, but they shifted their target to mid-2015 after the commission scheduled a final decision on July 8.