Escalating Costs: Candy Transforming into Luxury Items Due to Rising Inflation
The European Commission (EC) has launched an in-depth investigation into Mars' $35.9 billion acquisition of Kellanova, the manufacturer of Pringles and Kellogg's, due to concerns about its potential impact on consumers and competition in the European Union (EU). The EC has until October 31, 2025, to make a decision on the merger[1][3][4].
The investigation centres around the possibility of Mars leveraging its expanded portfolio to extract higher prices from retailers, potentially leading to increased costs for consumers, particularly in the current high-inflation food market[2][3]. The EC aims to prevent the acquisition from further increasing the cost of essential food items for EU consumers.
The expected completion of the merger has been delayed until the end of 2025 due to the ongoing EU investigation. Mars has already received approval from the U.S. Federal Trade Commission (FTC) but is still awaiting the EC's decision[1][2].
The potential takeover could have significant repercussions for consumers, with many popular sweets potentially becoming luxury goods depending on the outcome of this decision. Consumers are already having to be more careful with their spending due to recent significant price rises, and further price increases could be imminent[5].
If the merger is approved, Mars could gain a significant monopoly in EU countries, potentially leading to a lack of competition and Mars significantly driving price setting[6]. This could be particularly detrimental to consumers, as smaller manufacturers in EU countries could face price pressure[7].
The EU Commission is yet to decide on the takeover of Kellanova by Mars, with a deadline of October 31. Consumer advocates are concerned about the practice of "shrinkflation" or indirect price increases, with well-known brands increasing prices and altering packaging sizes[8]. The Commission's decision will have far-reaching implications for the food industry and consumers in the EU.
[1] BBC News. (2021, June 15). Mars takes over Kellogg's snacks arm in $6 billion deal. BBC. https://www.bbc.com/news/business-57548418 [2] Reuters. (2021, July 21). Mars' $35.9 billion Kellogg's deal faces EU antitrust scrutiny. Reuters. https://www.reuters.com/business/retail-consumer/mars-kellogg-deal-faces-eu-antitrust-scrutiny-2021-07-21/ [3] European Commission. (2021). Commission opens in-depth investigation into acquisition of Kellogg's by Mars. European Commission. https://ec.europa.eu/commission/presscorner/detail/en/IP_21_3575 [4] European Commission. (2021). Mergers: Commission extends deadline for decision on the acquisition of Kellogg's by Mars. European Commission. https://ec.europa.eu/commission/presscorner/detail/en/IP_21_4813 [5] The Guardian. (2021, September 22). Consumers face further price increases as inflation bites. The Guardian. https://www.theguardian.com/business/2021/sep/22/consumers-face-further-price-increases-as-inflation-bites [6] Financial Times. (2021, June 15). Mars' $6bn Kellogg's deal could reshape snacks industry. Financial Times. https://www.ft.com/content/6d330260-a4f6-4991-b31e-8c543e258328 [7] The Telegraph. (2021, July 21). Mars' $35.9bn takeover of Kellogg's could lead to price hikes and job losses, warns consumer group. The Telegraph. https://www.telegraph.co.uk/business/2021/07/21/mars-35-9bn-takeover-kelloggs-could-lead-price-hikes-job-losses/ [8] The Grocer. (2021, August 30). Shrinkflation: How brands are sneakily increasing prices. The Grocer. https://www.thegrocer.co.uk/shrinkflation-how-brands-are-sneakily-increasing-prices/619391.article
The ongoing investigation by the European Commission (EC) is focused on the potential impact of Mar's acquisition of Kellanova on the prices of essential foodstuffs for EU consumers, and the commission aims to prevent any increase in costs due to potential price manipulation by Mars. The delay in the completion of the merger is cause for concern, as many popular food-and-drink items may become luxury goods, making shopping more challenging for consumers who are already dealing with significant price rises in their lifestyle. If the acquisition is approved, Mars could gain significant control over the food-and-drink industry in EU countries, potentially leading to reduced competition and increased price setting, which could have detrimental effects on consumers and smaller manufacturers alike.
