Fyffes, Chiquita must forswear exclusive shipping deals in order to merge

The European Commission approves the merger of banana giants, but Fyffes must release Maersk from exclusivity clause.

   The European Commission is requiring Chiquita Brands and Fyffes not to enter into exclusive deals with shipping companies as a condition to of being allowed to merge.
   The EC authorized the merger, saying that while it combines the two largest suppliers of fresh bananas in Europe, “healthy competition will be preserved in the relevant markets thanks to the two companies’ relatively low and decreasing overall share of banana imports into the main Northern European ports, competition from an increasing number of other players, and the strong position of supermarkets, which develop their own private label bananas.”
   It continued, “However, in order to prevent any risk of shutting out competitors at the shipping level, the clearance is conditional upon Fyffes releasing the shipping company Maersk from an exclusivity clause, and upon both Chiquita and Fyffes refraining in the future from agreeing similar exclusivity provisions with shipping companies or incentivizing shipping companies to refuse to provide services for other banana companies.”
   The duration of the commitment is 10 years.
   The EC said its investigation “confirmed the claims of Chiquita and Fyffes as to the lack of barriers at the various levels of the banana supply chain, in particular the growing level, the ripening level and the intra-EU transport level. As regards to shipping, the investigation indicated, however, a serious risk of potential shutting out or limitation of competitors’ access to shipping services. The commitment proposed by Chiquita and Fyffes dispels this risk.”
   Reduced transportation costs are seen by the companies as a big advantage of the merger. A statement sent to Fyffes shareholders on Sept. 2 said the two companies believe their combination will generate annual “synergies of $37 million in the areas of fruit utilization, shipping, port operations, packaging and procurement.”