Deal concerning cheese brands is stopped to protect consumer

Präst, Herrgård and Grevé are well-known and popular hard cheeses among Swedish consumers. They are produced in Sweden using Swedish milk. The proposed concentration between undertakings would significantly restrict competition with regard to the known cheese brands. The Swedish Competition Authority has therefore decided to prohibit the transaction.

“It is important to safeguard competition in the food chain. If there is diminished competition, it is always the consumers who suffer in the end. This can lead to higher prices and reduced selection,” says Rikard Jermsten, Director-General of the Swedish Competition Authority.

The transaction was arranged so that only the three companies Arla Foods, Falköpings Mejeri and Norrmejerier would jointly control Svensk Mjölk AB in the future, and thus the three brands in question. The concentration would involve a collaboration between three of the four producers of Präst, Herrgård and Grevé regarding the licence terms for these brands, such as pricing, terms of sale and product design. This concentration would give the three prospective owner companies greater opportunities and incentives to provide competitors with more unfavourable terms of access to the necessary licence, but also reduce competition between them. This can lead to price increases and distortions of competition in already concentrated markets with high barriers to entry.  

One purpose of the deal, according to the three companies, would be to preserve the trademark protection for the three cheeses and thereby ensure the quality. However, the Competition Authority notes that there are other ways – less restrictive to competition – to ensure that the cheese varieties maintain their quality and continue to be produced using Swedish milk according to existing recipes and methods.

“It is with the consumers’ best interests in mind that we have decided to prohibit the intended business deal,” says Rikard Jermsten.

At present, the brands Präst, Herrgård and Grevé are owned by Svensk Mjölk AB, a subsidiary of Svensk Mjölk Ekonomisk förening, an economic association where the dairy farmers’ cooperatives Arla Foods, Falköpings Mejeri, Norrmejerier, Skånemejerier ekonomisk förening and Gäsene are members. In order to produce and sell cheese under these brands, a licence is required from Svensk Mjölk AB.

Cheese is produced under these brands by Arla Foods, Falköpings Mejeri, Norrmejerier and Skånemejerier AB. Skånemejerier AB has been owned by the French dairy company Lactalis since 2013, but has a partnership with Skånemejerier ekonomisk förening for its supply of raw milk. Gäsene does not produce any cheese under the brands in question. The producers primarily sell Präst, Herrgård and Grevé to food retailers, both under their own brands and for sale as the food retailers’ private label products.