CADE recommends remedies for Bimbo’s acquisition of Wickbold

On 27 May, the Office of the Superintendent General at CADE (SG) submitted the case for analysis of the Tribunal of CADE. The transaction refers to the acquisition of both the production business and sales of bakery products of the Wickbold Group, by Bimbo do Brasil Ltda.

Both companies compete in the segment of industrial baking in Brazil. Bimbo manufactures breads, cakes, dinner rolls, and snacks under several brands, such as Pullman, Plusvita, Ana Maria, Nutella, Rap10, Bisnaguito, Crocantíssimo, and Takis. Wickbold manufactures bread, cake, biscuits, and panettones under the brands Wickbold, Seven Boys, and Tá pronto. The companies operate in the retail and food service sectors, including restaurants, snack bars, fast food chains, hotels, and hospitals.

The transaction resulted in horizontal overlaps in the Brazilian market of manufactured cakes, breads, and muffins in the food service channel. In addition, there were overlaps in some retail market categories of ultra-processed bread. These bread categories were analysed both in Brazil and more restricted geographic scenarios, since several Brazilian regions have their own competition dynamics, varying in the capacity of the local competition to diverted demands.

The analysis considered several categories of ultra-processed bread, recognising that the products cannot be close substitutes, either for supply or demand. In terms of demand, market tests showed that the types of bread have the same specific characteristics: in some cases the price is the main competitive factor, while in others the brand, tradition, and reputation of the manufacturer have a more significant weight. In certain categories, the analysis showed that consumers are more likely to absorb higher prices, either for habit, fidelity to the brand, or lack of option.

The SG concluded that the transaction raises competition concerns in certain categories of industrialised bread, especially in the segments of whole-grain sliced bread and breads like tortillas/wraps, both in national and regional levels in Brazil. The transaction also raised competition concerns in other categories of regional markets.

CADE’s analysis found that, for markets or regions with alarming levels of concentration, the clearance of the transaction will depend on the adoption of structural remedies, to mitigate any competition risks identified.

Considering these facts, the SG decided to file an objection. After the submission of the case to the Tribunal, a commissioner will be assigned for a close analysis, followed by the adjudication. The legal time limit for CADE’s final decision is 240 days, which may be extended for more 90 days.