Further investigation needed into acquisition of three floriculture-product transport companies by Dutch cooperative Royal FloraHolland

Royal FloraHolland (RFH), a Dutch cooperative of floriculture growers, wishes to acquire three transport companies specialized in the handling of flowers and plants. These three companies are De Winter, Van Marrewijk (Wematrans), and Van Zaal. The combined activities will be housed in a new company: Floriway. The Netherlands Authority for Consumers and Markets (ACM) cannot rule out possible anticompetitive concerns with regard to the transport of flowers and plants. That is why it wishes to conduct a further investigation into this acquisition.

Royal FloraHolland is a cooperative of floriculture growers. RFH is also the world’s largest auction and trading platform for floriculture trade.

Growers that are members of RFH sell their products through RFH. This is done either using a clock auction (descending price auction) or through direct trading between grower and buyer. RFH handles the financial transactions and also any on-site logistics, if necessary. Transport companies in the floriculture industry such as the three transport companies that RFH wishes to acquire transport floriculture products on behalf of growers and buyers.

Growers that are not members of RFH are able to trade using RFH’s clock auction or they can negotiate directly with buyers without RFH or similar trading platforms coming in between them.

What are the next steps?

If the parties involved decide to continue with their acquisition plans, and file an application for a license with ACM, ACM will then further investigate the planned acquisition’s consequences. It will look into the market for floriculture-product transport, and into Floriway’s (the new transport company) position on that market. ACM will also look into the market for floriculture-product trading, and into RFH’s position on that market. If RFH has a dominant position on the market for floriculture-product trading, it will be able to abuse that position in order to give Floriway preferential treatment and exclude competitor transport companies from the market. This could have negative effects on the price and quality of floriculture-product transport, as well as on innovation in that market. One of the questions in that context is whether the option of direct trading without RFH or similar trading platforms coming in between them exerts sufficient competitive pressure on RFH.

ACM’s concentration control: mergers, acquisitions, and joint ventures

With any merger or acquisition, there is the question of whether sufficient competition will remain on that market, right after the transaction as well as in the future. Competition ensures that products are of high quality and that they are offered on the market at competitive prices. Competition also promotes innovation. That is why ACM decides in advance whether or not companies are allowed to merge or acquire another company. ACM assesses whether the markets involved will continue to work well for people and businesses, now and in the future.