Sigma Alimentos / Zwanenberg Mexico / Quesos la Caperucita / Arosa

MEXICO, 1997

Sigma Alimentos, SA de CV (Sigma), Zwanenberg Mexico, SA de CV (Zwan), Quesos la Caperucita, SA de CV (Quesos la Caperucita), and Arosa, SA de CV (Arosa) filled a merger notification. Sigma would acquire 100 percent of Zwan� capital stock and its trademarks, as well as the trademarks owned by Quesos la Caperucita and Arosa.

The relevant market for the proposed operation was the production and distribution of refrigerated food, mainly the national market for ham and sausages.

Sigma controls 38 percent of the national supply of cold cuts. It sells these products through all kinds of food stores, including supermarkets, instead Zwan sells its products only in supermarkets. The proposed merger would give Sigma and Zwan a joint market share of 42 percent of cold cuts sold in supermarkets. Kir Alimentos, SA de CV (Kir), its main competitor, would maintain a market share of 21 percent. As to the market shares in ham sold in supermarkets, Sigma-Zwan would have 42 percent and Kir 15 percent. The rest of the market is divided among 400 minor competitors supplying regional market areas. The Federal Competition Commission (FCC) concluded that the following elements would give Sigma the ability to fix prices or restrict supply in the relevant market:

• Sigma� market share in the relevant market;
• Sigma� ownership over Mexico� main distribution network for refrigerated food, and
• The fact that the transaction would allow the accumulation of important trademarks within Sigma.

Consequently, the FCC opposed the transaction since it would diminish competition in the relevant market and endanger free market access.