The UK Competition and Markets Authority (CMA) has decided to refer the planned poultry feed joint venture between ForFarmers UK and 2Agriculture to an in-depth merger investigation, unless remedies can be agreed. The two companies say they are considering their next steps.
The agreement to pursue a joint venture conditions between ForFarmers UK and 2Agriculture, a Boparan Private Office business via Amber REI Holdings – subject to regulatory approvals – was first announced in July 2022. The combined business would have the capacity to make some three million tonnes of poultry feed each year from 19 mills across the UK.
The CMA launched the first phase of a merger investigation on October 26th. This generated “a number of complaints from customers and other market participants in relation to the impact this joint venture could have on choice of feed suppliers and poultry feed prices.
It has concluded that on current information “it is or may be the case that this merger may be expected to result in a substantial lessening of competition within a market or markets in the UK”. Therefore, “the merger will be referred for a Phase 2 investigation, unless the parties offer acceptable undertakings to address these competition concerns”.
Specific concerns raised at the Phase 1 stage centre on competition concerns in four local areas: East Anglia and the Burston feed mill; north-western England and the Bury and Preston mills; and North Wales and the Llay mill. “While both businesses currently compete for customers within each of these local areas, the CMA is concerned that the combined business would not face sufficient competition after the merger… leading to higher prices for poultry feed, lower quality feed or worse quality of service,” says the Authority.
The Phase 1 review found the combined businesses would account for 50%-60% of the supply of meat poultry feed to third parties in three of these local areas (Burston, Bury and Llay) and 40%- 50% in the Preston local area (Preston).
In addition, the review raised concerns that the joint venture could unfairly favour Boparan’s chicken farming and processing businesses, resulting in less choice for smaller chicken farmers and processors who might rely on ForFarmers and Boparan for their chicken feed.
“Feed is the biggest expense faced by farmers when rearing chicken, the UK’s favourite meat,” comments Sorcha O’Carroll, senior director of mergers at the CMA. “With food prices already increasing and the wider cost of living crisis, it is vital that we don’t allow a reduction in competition between poultry feed suppliers, which could make this situation worse – both for farmers and shoppers at the check-out.”