Under the EU Merger Regulation, the EU Commission has “cleared unconditionally” the proposed acquisition of joint control over Linden Foods by ABP Food Group and Fane Valley.
Following the transaction, Linden will be jointly controlled by ABP and Fane Valley.
ABP has forwarded a proposal to increase their shareholding to 50%.
The Commission has said that “the transaction would not adversely affect competition in the EU Single Market”.
On 25th August 2017, the European Commission received notification of the transaction.
ABP, Fane Valley and Linden Foods conduct business in Ireland and indeed across the waters in the U.K, by purchasing, slaughtering and processing meat from live cattle, sheep and lambs.
Their other activities including the sale of fresh and processed meat produce and markets obtained for animal by-products, many of which overlap between the three companies in question- Fane Valley- a U.K. farmer-owned co-operative society, Linden Food of the UK, which is currently controlled by Fane Valley and ABP Food Group, Ireland.
A broad investigation into the activities of the companies in question was undertaken by The Commission.
The first common activity was identified as “”On the potential impact of the markets for the purchasing of live animals for slaughter.”
Following assessment, the Commission found that merged entity would not be able to offer farmers lower prices for their animals, since farmers will continue to have sufficient alternative buyers for their animals.
Farmers in the Republic of Ireland, Northern Ireland and the U.K. can easily switch slaughterhouses in bid to secure better prices for their animals, the investigation found.
The potential of the increase of slaughterhouses’ buyer power to the detriment of farmers also formed part of the assessment.
The second activity was identified as “on competition in the downstream markets relating to the sale of fresh and processed meat”.
A number of strong competitors will remain active after the merger and that buyers will be able to readily switch to other meat providers.
The final overlapping activity was identified as “On the collection of animal by-products generated by slaughtering activities”.
Space capacity exists in these markets so that the transaction is unlikely to have a negative impact on slaughterhouses or farmers, the Commission added.
Linden Food is not active in the processing of animal by-products, with active involvement in the slaughtering of cattle and sheep animals in the U.K.
The Commission concluded the investigation by stating that “the proposed transaction would raise no competition concerns on any of the markets concerned.”
The Commission has consulted with national competitions authorities in both Ireland and U.K. and noted how both have a “parallel transaction” the merger between two meat processors with activity in Ireland and U.K.- Dunbia and Dawn Meats.
The Commission revealed that the assessment of the present transaction by the Commission does not change, irrespective of the outcome of the assessment carried out by the two national competition authorities in relation to the Dunbia/Dawn Meats merger.
The transaction between Slaney Foods JV by ABP and Fane Valley received the green light in 2016.