The Competition Authority is facing a substantial legal costs bill following its unsuccessful High Court defence of its refusal to permit the acquisition by the Kerry Group of Breeo, the consumer foods company formed following the restructuring of Dairygold.
Mr Justice John Cooke, who last month allowed the Kerry Group’s appeal against the Authority’s decision, today awarded 80 per cent costs of the eight day appeal hearing to Kerry against the Authority.
The judge said he was not awarding the full costs against the Authority because he had found in favour of some of its arguments, particularly regarding the issue of the closeness of private label products as a source of competition to various brands.
He considered “a fair balance” between the sides would be struck by ordering Kerry was entitled to recover 80 per cent of the costs.
On March 19th last, the judge had allowed the appeal by Rye Investments Ltd, a wholly owned subsidiary of Kerry Group plc, against the Authority’s determination of August 2008 prohibiting the proposed acquisition by Rye of Breeo Foods Ltd and Breeo Brands Ltd, two wholly owned subsidiaries of Reox Holdings plc.
Reox is an Irish unlisted plc with 26 per cent of its shares held by Dairygold Co-operative Society Ltd and the rest by 7,500 shareholders who are mainly members of Dairygold.
The proposed acquisition involved transferring from Dairygold to Kerry the consumer foods division of Reox (the Breeo companies), a number of properties, including plants at Mitchelstown, Co Cork, and Tallaght, and the intellectual property rights of its business and assets, including some 225 trade marks.
The trade marks comprise many well known brands, including Dairygold, Galtee, Shaws, Roscrea, Mitchelstown and Calvita. Kerry owns other well-known trade marks, including Denny, Ballyfree, Clover, Low Low and EasiSingles. Both Breeo companies had a turnover of €200 million, with €166 million of that generated in the State.
The Authority refused the takeover on grounds it would substantially lessen competition in the markets for rashers, non-poultry cooked meats and processed cheese but the judge ruled the Authority made two material errors in how it reached its conclusions.
He found the Authority erred significantly in how it concluded the cheese product market is divided between natural and processed cheese and also ruled it erred materially in how it concluded the merger would mean substantial lessening of competition in the markets for rashers and non-poultry cooked meats.
