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US antitrust regulators clear deal, say it is not an

anticompetitive merger

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EU raises concerns about combined company's power in

negotiations with retailers

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Mars optimistic can close transaction towards the end of

2025

By Foo Yun Chee and Benoit Van Overstraeten

BRUSSELS, June 25 (Reuters) - Candy maker Mars' takeover

of Pringles maker Kellanova ( K ) was cleared by U.S. antitrust

regulators on Wednesday, but their EU counterparts opened a

full-scale investigation into the $36 billion deal, saying it

could lead to price hikes.

President Donald Trump's antitrust enforcers, including

Federal Trade Commission Chairman Andrew Ferguson, have said

they will not hesitate to block deals that harm competition in

ways that hurt consumers, but also vowed not to stop deals that

do not pose such concerns.

"Our job is to determine whether there is a violation of

American law that we can prove in court. And once we've

concluded there is not, our job is to get out of the way,"

Bureau of Competition Director Daniel Guarnera said in an FTC

statement announcing the early termination of its review of the

deal. The deal did not meet the standard for an anticompetitive

merger, the FTC said.

Mars said it was pleased by the U.S. decision and that the

deal had received all regulatory clearances aside from the EU.

It said it expected the deal to close towards the end of 2025.

Kellanova ( K ) did not immediately respond to a request for

comment on the U.S. approval, which was made outside regular

business hours.

The EU's move could force Mars to divest assets to address

the European competition concerns or risk the deal being

blocked. The EU warned that prices may rise as the deal will

boost Mars' negotiating power with retailers.

Mars said after the EU move that it was disappointed with

the EU's decision but it remained optimistic over the outcome of

the transaction.

"We remain confident the pending combination of Mars

Snacking and Kellanova's ( K ) complementary footprints and portfolios

will deliver more choice and innovation to consumers," said Mars

in a statement.

"We look forward to delivering the benefits of the pending

transaction to all Mars and Kellanova ( K ) stakeholders," it added.

Mars announced the deal last August, among the biggest in

the sector, that would bring brands from M&Ms, Snickers and

Whiskas to Pringles, Pop-Tarts and Kellogg cereals under one

roof.

Combined, Mars and Kellanova ( K ) would account for roughly 12%

of the U.S. snacking and candy industry, according to market

share data from NielsenIQ. This would still leave the market

with competitors including PepsiCo PEP.O, Kraft Heinz KHC.O,

Mondelez MDLZ.O, Hershey HSY.N, General Mills GIS.N and others.

Consumer advocacy groups had called on the FTC to

investigate the deal last year, likening it to grocery chain

Kroger's proposed acquisition of rival Albertson's, and raising

concerns it would lead to higher grocery prices. Some experts at

the time the deal was announced noted a limited overlap among

their offerings.

The EU competition enforcer said the deal would boost Mars'

product portfolio, giving it increased leverage to extract

higher prices during negotiations with retailers and in turn

would lead to higher prices for consumers.

It said both companies have a strong market position in

several product markets in multiple EU countries due to their

brands seen as must-have for consumers.

The Commission also cited concerns from some European

retailers about Mars' increased bargaining power and that they

may be forced to accept higher prices, in order to avoid not

being able to offer the products of Mars and Kellanova ( K ).

"As inflation-hit food prices remain high across Europe, it

is essential to ensure that this acquisition does not further

drive up the cost of shopping baskets," EU antitrust chief

Teresa Ribera said in a statement.

The Commission set an Oct. 31 deadline for its decision.

Reuters exclusively reported on June 18 that the deal would

trigger intensive EU regulatory scrutiny.

European retailers have voiced worries about the power of

large international suppliers of branded packaged goods and the

high concentration levels in products such as breakfast cereals,

carbonated drinks, confectionery and frozen desserts.