October 28, 2011 - Assignment

Milko merger with Arla Foods approved by Swedish Competition Authority

The Swedish Competition Authority has approved the merger of Swedish dairy processor Milko and Arla Foods, clearing the way for Arla to control Milko’s volume share in Swedish raw milk after the official merger on 1 November 2011.

The Competition Authority undertook a full Phase 2 investigation and considered several difficult aspects of the case, including the “failing firm doctrine” pleaded by the parties. In brief, the doctrine stipulates that a merger which is problematic from a competition law perspective should receive clearance if one of the parties is in financial difficulty and prohibition would result in the party going bankrupt and disappearing from the market. This is only the second time the doctrine has been applied in Sweden, with the first instance having occurred over ten years ago.

Milko, a co-operative owned by 650 dairy farmers in Sweden, has a turnover of approximately SEK 2.3 billion. Arla Foods is a global dairy products company owned by 7,200 dairy farmers in Sweden, Denmark and Germany and has a turnover of approximately SEK 67 billion. The clearance is conditioned upon the sale of a dairy plant and several Milko brands.

Milko was advised by Mannheimer Swartling in the matter. The firm’s team handling competition law issues was led by Stefan Perván Lindeborg, primarily assisted by Mårten Andersson, Urszula Sieradzka and Daniel Svensson.