EU opens probe into joint coffee venture

European Union antitrust regulators opened an in-depth investigation on Monday into the proposed joint venture between leading Dutch coffee vendor Douwe Egberts Master Blenders 1753 and US snack heavyweight Mondelez.

The two companies announced plans for a merger in May, aiming to contend with other coffee industry majors like Nestle. The "world's leading pure-play coffee company" would be expected to have annual sales of more than $7 billion (5.6 billion euros).

But the European Commission is concerned the proposal would reduce competition in a key industry in multiple EU countries, including Austria, France, Denmark and Latvia.

"This concentration of key local brands in the hands of one company increases the likelihood of price increases for retailers and ultimately for consumers, " the EC said in a statement.

The report added the two firms had offered to address the Commission's competition concerns, but their commitments were deemed "insufficient."

The $5 billion deal would bring together Mondelez's grocery coffee products and D.E. Master Blenders brands under one roof in a new Dutch-based venture called Jacobs Douwe Egberts.

D.E. Master Blenders is known for its popular Senseo brand and coffee pods, while Mondelez operates its own single-serve coffee system Tassimo.

The EC has until May 6, 2015 to reach a decision on the matter.

el/uhe (AFP, Reuters)