REG - Competition and Mkts - Poultry feed deal may raise prices in East Anglia

ForFarmers NVAnnouncement

06/11/2024 08:15

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RNS Number : 1481L  Competition and Markets Authority  06 November 2024

Poultry feed deal may raise prices for farmers in East Anglia

CMA's Phase 1 investigation has found that Boparan's deal to buy ForFarmers'
Burston feed mill could lead to farmers in East Anglia paying higher prices to
feed their poultry.

A Phase 1 investigation by the Competition and Markets Authority (CMA) has
found that Boparan's proposed purchase of ForFarmers' Burston feed mill site
could lead to a substantial lessening of competition (SLC) in the supply of
poultry feed to independent customers (such as farmers) in East Anglia.

The CMA has also found that as a result of the transaction, Boparan would have
the ability and incentive to harm rival poultry meat producers, leading to
higher poultry feed costs for chicken farmers and processors which could be
ultimately passed to retailers and consumers.

ForFarmers and Boparan (through 2Agriculture) both manufacture and supply
chicken and other types of poultry feed in the UK.

The CMA's investigation found that the deal could lead to reduced competition
in the local area around Burston - 1 of the 2 feed mill sites Boparan is
seeking to purchase from ForFarmers. The CMA is concerned that the deal could
lead to less capacity for feed being supplied to independent farmers and
processors resulting in higher costs and a reduction in quality of services.

The CMA did not find competition concerns in relation to the second feed mill
site Boparan is planning to acquire in Radstock.

ForFarmers and Boparan have 5 working days to submit proposals to address the
CMA's concerns. If suitable proposals are not submitted, the CMA will progress
to an in-depth Phase 2 investigation.

Joel Bamford, Executive Director of Mergers at the CMA, said:

"We're concerned that this deal could worsen competition between poultry feed
suppliers in East Anglia - leading to higher costs for farmers which could
then be passed down to shoppers.

"It's now up to the companies to offer solutions to address our concerns and
avoid the deal moving to a full Phase 2 investigation."

For more information, visit the Boparan / ForFarmers (Burston and Radstock
mills)
(https://www.gov.uk/cma-cases/boparan-slash-forfarmers-burston-and-radstock-mills-merger-inquiry)
case page.

 ENDS 

Notes to Editors:

1.   ForFarmers is a European manufacturer and supplier of animal feed,
based in the Netherlands. 2Agriculture, a subsidiary of Boparan, is one of the
UK's largest suppliers of poultry feed by volume produced and uses its
production to supply Hook 2 Sisters, a company affiliated with Boparan, as
well as farmers on the open market.

2.   In 2022, the CMA investigated a joint venture by ForFarmers and
Boparan. Following a Phase 1 investigation, the CMA found that the merger gave
rise to competition concerns in the local areas around four of the feed mills
operated by the combined businesses, namely in Burston, Bury, Llay and
Preston. The combined businesses would have accounted for 50 to 60% of the
supply of meat poultry feed to third parties in three of these local areas
(Burston, Bury and Llay) and 40 to 50% in the fourth local area (Preston). The
companies offered proposals to address the CMA's concerns at the time, but the
CMA considered that these were unlikely to be sufficient in addressing its
competition concerns and, as a result, the deal was referred for an in-depth
Phase 2 investigation. Ultimately, the deal was abandoned by the Parties on 8
February 2023 during the CMA's Phase 2 investigation. More information on the
CMA's previous investigation is available on the ForFarmers / Boparan JV
(https://www.gov.uk/cma-cases/forfarmers-slash-boparan-jv-merger-inquiry) case
page.

3.   The CMA has a statutory duty to promote competition for the benefit of
consumers and assesses each case on its individual merits. This includes a
duty to investigate mergers that could raise competition concerns in the UK
where it has jurisdiction to do so. In this case, the CMA has concluded that
the CMA has jurisdiction to review this merger because a relevant merger
situation has been created: each of Boparan and ForFarmers' Burston and
Radstock feed mills is an enterprise that will cease to be distinct as a
result of the merger and the turnover test is met.  More information on the
CMA's mergers jurisdiction and procedure can be read on its guidance page
(https://www.gov.uk/government/publications/mergers-guidance-on-the-cmas-jurisdiction-and-procedure)
.

4.   All media enquiries should be directed to the CMA press office by email
on press@cma.gov.uk (mailto:press@cma.gov.uk) , or by phone on 020 3738 6460.

5.   All enquiries from the general public should be directed to the CMA's
General Enquiries team on general.enquiries@cma.gov.uk
(mailto:general.enquiries@cma.gov.uk)  or 020 3738 6000.

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