BRUSSELS, Oct 27 – The EU\’s competition watchdog on Tuesday cleared the plan by PepsiCo, the maker of Pepsi soft drinks, to acquire full control of its two key bottlers for 7.8 billion dollars, creating one of the largest food and beverage companies.
"After examining the operation, the commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it," the European Commission said in two separate statements.
Under merger agreements, PepsiCo will buy all of the outstanding common stock it does not already own in its two largest bottlers — The Pepsi Bottling Group (PBG) and PepsiAmericas.
PepsiCo presently owns 33 percent of PBG and and 43 percent of PepsiAmericas.
The commission decided that the parties\’ activities overlap to a very limited extent but that the proposed transaction would lead to the vertical integration of the brand owner and its bottler.
As both bottlers were already bottling, selling and distributing PepsiCo beverages, "it is unlikely that the transaction would lead to a significant change in the market structure," the commission said in two separate but similar rulings.
The transaction involves "refreshing" such brands as Pepsi and Gatorade and introducing new products as well as steps to improve its cost structure, according to Pepsico.