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THE EU-SUGAR MARKET REFORM IS EXPECTED TO FACILITATE COMPETITION

30 10 2008

Having thoroughly examined and assessed the circumstances related to the pending reforms in the European sugar market the Competition Council passed a decision to authorise the concentration deal by TitoConcerto A/S by acquiring a 100 percent interest in Danisco Sugar A/S according to the submitted notification.

As indicated in the notification on the intended notification the German sugar producer and the supplier Nordzucker AG  that owns fifteen sugar-beet processing plants located in Germany, Poland, Slovakia and Serbia has established TitoConcerto A/S for a purpose of acquiring an interest in Danisco Sugar A/S. Through its branch operating in Poland Nordzucker AG sells its production in Lithuania to industrial customers only (such as food product producers, etc.).

Danisco Sugar A/S is a wholly controlled subsidiary of Danisco A/S that currently manages six sugar factories in Denmark, Sweden, Finland, Germany and Lithuania, and operates two speciality production sites in Sweden and Finland. Danisco Sugar A/S is also a producer of a range of standard and special sugar products, and a supplier of fodder to the agricultural sector. In Lithuania Danisco Sugar A/S operates through the undertakings controlled thereby, namely Danisco Sugar KÄ—dainiai AB and Danisco Sugar UAB of which only Danisco Sugar KÄ—dainiai AB is a sugar producer.

As Nordzucker AG indicated in its submission the justification of the intended concentration lies in the anticipation of the large scale EU-sugar market reform which in a very foreseeable future will essentially change the structure of the market concerned. The reform will lead to a reduction in the EU-produced sugar quantity alongside with the increased sugar imports from Africa, Caribbean and the Pacific region which in combination with the sugar market structure changes will have an impact upon the reduction in the sugar prices. In view of the anticipated changes and the increased competition Nordzucker AG intends to strengthen its principal activity and develop the sugar business by acquiring the sugar business of Danisco Sugar A/S. No major changes in the organisational structure of Danisco Sugar A/S and its subsidiaries are anticipated as a result of concentration, besides the company anticipates maintaining the same distribution operations.

The Competition Council having assessed the situation, most importantly, in the related market of the supply of refined white sugar has concluded that the degree of concentration in the related market will be changing, however, will not result in the creation or strengthening of a dominant position or a significant weakening of competition due to certain circumstances related to the common sugar regime that EU Member States are subject to. The duty and quote-free export of white sugar into the EU will stimulate competition inside the EU, basically as a result of the possibility to perform the sugar supplies directly without involving sugar producers into the supply chain. Furthermore, the Lithuanian industrial buyers have been offered a possibility to opt for alternative sugar supply sources.

Competition Council Spokesperson