Completed acquisition by ABF Holdings Limited of Primary Diets Limited

Affected market: Animal feeds

No. ME/2522/06

Please note that the full text of the decision can be downloaded from using the link on the right. What follows are extracts regarding the parties, the transaction, jurisdiction, third party views, assessment and decision.

The OFT's decision on reference under section 22(1) given on 30 August 2006. Full text of decision published 5 September 2006.

Please note that the square brackets indicate figures or text which have been deleted or replaced with a range at the request of the parties for reasons of commercial confidentiality.

PARTIES

ABF Holdings Limited is a wholly-owned subsidiary of Associated British Foods plc, which is an international food, ingredients and retail group. ABF Holdings Limited is active in the animal feed sector via its wholly-owned subsidiary, ABNA Limited (ABNA). ABNA is a UK animal feed supplier.

Primary Diets Limited (PDL) is a small, privately run animal feed business that specialises in the manufacture of a type of pig feed specifically designed for young pigs. PDL's UK turnover was £[ ] for the year ended 31 October 2005.

TRANSACTION

ABF Holdings Limited acquired the entire issued share capital of PDL on 4 July 2006. The transaction was notified to the OFT on 4 July 2006. The administrative deadline is 1 September 2006. The statutory deadline is 5 November 2006.

JURISDICTION

As a result of this transaction ABF Holdings Limited and PDL have ceased to be distinct. ABF Holdings Limited (via ABNA) and PDL overlap in (a) the supply of compound pig feed, in which the parties estimate that they have a combined share of supply of [35 per cent to 45 per cent] (with an increment of [less than 5 per cent]); (b) the supply of compound 'other poultry' feed, in which the parties estimate that they have a combined share of supply of [50 per cent to 60 per cent] (with an increment of [less than 5 per cent]); and (c) the supply of compound game feed, in which the parties estimate that they have a combined share of supply of [35 per cent to 45 per cent] (with an increment of [less than 5 per cent]). Therefore the share of supply test in section 23(2) of the Enterprise Act 2002 (the Act) is met. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.

THIRD PARTY VIEWS

None of the third parties who were contacted by the OFT raised any significant competition concerns about this merger. One third party raised a concern in relation to the widening of ABNA's portfolio.

ASSESSMENT

The parties overlap in the supply of monogastric compound animal feed, in particular pig feed, 'other poultry' feed and game feed. Post-merger the parties estimate they have combined shares of supply of [35 per cent to 45 per cent] (with an increment of [less than 5 per cent]) in relation to compound pig feed, [50 per cent to 60 per cent] (with an increment of [less than 5 per cent]) in relation to compound 'other poultry' feed and [35 per cent to 45 per cent] (with an increment of [less than 5 per cent]) in relation to compound game feed.

Despite relatively high shares of supply in the segments in which the parties overlap, the increments to the shares of supply are very low – ranging from [less than 5 per cent] to [less than 5 per cent]. Moreover, there is at least one other national compound feed manufacturer, of a similar size to ABNA, which is active across all the segments in which the parties overlap. All third party customers who were contacted during the course of this investigation indicated that they would still have a number of alternative suppliers post-merger.

Since 1997, ABNA and PDL have had a distribution agreement in place under which ABNA has acted as PDL's distributor in the UK for the pig feed it manufactures, although PDL supplies some customers directly. [ ] Third party responses indicated that the distribution agreement limited the degree of competition between the parties pre-merger.

One third party raised an alleged concern in relation to the widening of ABNA's portfolio. However, the increase to the size of the portfolio in this case is small and the parties face competition from other producers who also have a broad portfolio. Furthermore, for some time prior to the merger ABNA had been PDL's distributor in the UK. In this capacity, ABNA already had the opportunity to promote its other products alongside its distribution of PDL's product. Therefore, the OFT does not consider that the merger gives rise to conglomerate concerns resulting from alleged 'portfolio' effects.

With the exception of the alleged concern relating to portfolio effects of the merger which has been dealt with above, none of the third parties who were contacted by the OFT raised any significant competition concerns about this merger. In addition, customers considered that they would still have plenty of alternative suppliers post-merger.

Consequently, the OFT does not believe that it is or may be the case that the merger has resulted or may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

DECISION

This merger will therefore not be referred to the Competition Commission under section 22(1) of the Act.

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