Mars, Kellanova merger approved by FTC, but faces hurdles in the E.U.

The U.S. Federal Trade Commission (FTC) concludes its antitrust review of Mars’ pending acquisition of Kellanova and clears the merger. However, the acquisition is delayed, as the European Commission opens an antitrust investigation.

“The Commission cares deeply about any competition concerns that affect American consumers, including in food products,” said Daniel Guarnera, director of the Bureau of Competition, U.S. “Commission staff closely reviewed every aspect of this transaction, including both specific product markets and potential portfolio effects from the acquisition. They turned over every stone needed to arrive at a robust assessment of the likely competitive effects of this transaction. After nearly a year of investigation, dozens upon dozens of interviews with non-parties at all levels of the supply chain (including large chains and small, independent businesses), extensive data analysis, sworn testimony from party witnesses, and the review of hundreds of thousands of documents, staff found that the evidence pointed in one direction: this transaction does not meet the standard for an anticompetitive merger set by Section 7 of the Clayton Act.”

The European Commission has preliminary concerns that the transaction could lead to higher prices for consumers due to Mars’ increased negotiating power towards retailers in the European Economic Area (EEA). More specifically, the Commission’s serious doubts are based on the following preliminary findings:

• The parties each have a strong market position in several product markets in multiple member states. This is in part due to the fact that they carry brands that are considered must-have for end consumers.
• Several retailers across the EEA have raised concerns about Mars’ increased bargaining power, should it be able to add Kellanova’s must-have brands to its existing portfolio. As a result, retailers could be forced to accept higher prices, in order to avoid not being able to offer the products of Mars and Kellanova.
• Many consumers tend to make their primary grocery shopping in a single supermarket and could decide to change supermarket if they could not find the companies’ products.

Under the EU Merger Regulation, the Commission will now carry out an in-depth investigation into the effects of the proposed transaction to determine whether these initial competition concerns are confirmed. It has time until October 31 to take a decision.

“By acquiring Kellanova, Mars will add several very popular brands of potato chips and cereals to its already broad and strong product portfolio. As inflation-hit food prices remain high across Europe, it is essential to ensure that this acquisition does not further drive up the cost of shopping baskets. Our in-depth investigation will assess the transaction’s impact on the price of these companies’ products for consumers in the EEA,” said Teresa Ribera, executive VP for clean, just and competitive transition, EC.

Poul Weihrauch, CEO & president, Mars, said, “We are very pleased that the FTC has completed its review of the transaction without the imposition of any condition or requiring any remedy. The transaction has now received all but one of the 28 required regulatory clearances, with only the review by the European Commission outstanding. This brings us one step closer to uniting two iconic businesses with complementary footprints and portfolios, allowing us to deliver more choice and innovation to consumers.”

Steve Cahillane, chair, president & CEO, Kellanova, added, “This represents a significant milestone on our path to combine Mars Snacking and Kellanova. We continue to believe this is an exciting opportunity to create a broader, global snacking business that is better positioned to meet evolving consumer needs and preferences.”

Based on the current status of the ongoing antitrust review by the European Commission, Mars and Kellanova expect the transaction to close towards the end of 2025, subject to customary closing conditions.