Long Clawson Dairy Limited and Millway: a report on the completed acquisition by Long Clawson Dairy Limited of the Millway Stilton and speciality cheese business of Dairy Crest Group

On 8 October 2008, the Office of Fair Trading (OFT) referred the completed acquisition of the Stilton and speciality cheese business of Dairy Crest Group plc (Millway) by Long Clawson Dairy Limited (Long Clawson) to the Competition Commission (CC) for investigation. This document, together with the appendices, constitutes the CC’s final report. The report provides a brief overview of the Stilton and blended cheese industry and describes the parties to the merger. It then continues to provide an outline of the merger, detailing the terms by which Long Clawson would acquire the trade and assets of Millway. Other factors that informed the CC’s final ruling, all of which are considered in this report, are market and product definition, pre-merger competition, the merger, Millway’s recent customer losses and the competitive effects of the merger. The report concludes that Millway was failing and could not be restructured to become economically viable. As a result the CC concludes that had Long Clawson not bought the business, Dairy Crest would have closed and its assets would have excited the market. This book features industry background and the parties; market definition; product market definition: Blue Stilton and White-Stilton-based blended cheese; pre-merger competition: market shares, switching costs, barriers to entry and bargaining power; the merger: Dairy Crest’s rationale for the sale of Millway and Long Clawson’s rationale for acquiring Millway; Millway’s recent loss of customers; the counterfactual; competitive effects of the merger; and, conclusion.