Cargill Cleared to Buy Pagnan Business

NEW YORK - Feb 7/06 - SNS -- Cargill's purchase of the inland water transport business of the Italian company Pagnan has been cleared by The European Commission.

Although Pagnan is the only business operating inland water transport services for dry bulk cargo in Italy, other companies will be able to compete effectively if the market conditions render inland water transport competitive with road/rail transport for dry bulk products, The European Commission said.

The Commission has concluded that the proposed transaction will not significantly impede effective competition in the European Economic Area (EEA) or any part of it.

"There are no horizontal overlaps between the parties as Cargill does not own any assets relating to inland water transport of agricultural commodities in Italy or elsewhere in the EEA. However, as Cargill is active in several upstream and downstream markets in the import and trading of agricultural commodities, the Commission examined whether the transaction may give rise to concerns in certain of these related markets," the commission said.

Currently, Pagnan uses its barges to their full capacity in providing inland water transport services to Cargill and, therefore, it does not offer these services to third parties. The envisaged transaction would therefore have no impact on this activity.

Pagnan is the only business operating inland water transport services for dry bulk cargo in Italy, but there is no real demand from other potential clients for these services. For example, only 5-10% of oilseed meal is transported by waterway in Italy. The vast majority (90-95%) is transported by road or by rail.

"Should demand emerge from other customers in Italy, companies wishing to enter the market would only have to procure assets similar to those currently operated by Pagnan," the commission said. "Moreover, the transaction is very small and has acquired a Community dimension only because the envisaged acquisition and a previously cleared transaction between the same companies are considered as a single transaction under the Merger Regulation."