Poultry feed merger: ForFarmers UK and 2Agriculture fail to allay CMA's competition concerns
The UK watchdog rejected the remedies suggested by both parties to address its concerns, which it published online in late December 2022, that the proposed joint venture (JV) could result in UK farmers paying higher prices to feed their poultry.
The planned tie-up was first announced by the Netherlands headquartered ForFarmers group in July last year. ForFarmers UK and 2Agriculture both manufacture and supply chicken and other types of poultry feed in the UK.
Between them, the two entities operate 19 mills in the region. One of the UK’s largest suppliers of poultry feed by volume produced, 2Agriculture uses its production to supply Hook 2 Sisters, a company affiliated with Boparan, as well as farmers on the open market.
Findings of initial investigation
The competition authority's Phase 1 review of the proposed tie-up found there could be particular challenges arising from combining the operations in relation to the supply of competitively priced poultry feed at a local level, within the catchment areas centered on the companies’ Burston, Bury, Llay and Preston mills; and on the downstream supply of chicken in the UK.
While both businesses currently compete for customers within each of these local areas, the regulator is concerned that the combined business would not face sufficient competition after the merger.
Additionally, the CMA said it has received complaints from customers and other market participants about the potential impact the combined businesses could have on the choice of feed suppliers as well as on feed prices.
The deadline for the finalization of the Phase 2 investigation is June 25, 2023.
ForFarmers and 2Agriculture said they are now considering their next steps.