ABP makes case to EU competition authorities on Slaney tie-up

ABP and Fane Valley have said that more effective and better-resourced Slaney in Ireland is needed to compete on international markets.

The companies made the statement in documents submitted to the European Commission Competiton Authorities this week.

They said the strategic rationale of the Proposed Transaction stems fundamentally from the prevailing international market conditions and the opportunities for growth for the Slaney Joint Venture (JV).

ABP and Fane Valley said that they strongly believe that the most effective way to grow their international presence, increase competitiveness on these markets and generate synergies is through the Slaney JV, by bringing together the Slaney JV businesses and the expertise, resources, reach and presence of the parent companies.

In their notification document to the Commission the pair did concede that ABP and the Slaney JV  do overlap on the island of Ireland for the purchase of bovine and ovine animals.

However, they said that the strategic emphasis of the Proposed Transaction is on the downstream markets for the sale of fresh beef and lamb/sheep meat which are primarily international export markets.

“The strategic and economic rationale for the concentration does not relate to Ireland (a market where the price paid for cattle is above the EU average) but is focused on the potential of the Proposed Transaction to generate growth for the businesses of ABP and Fane Valley through the Slaney JV on international markets”, they said in the documents.

ABP and Fane Valley also said that proposal is vital to the long-term success of the Slaney JV business and ensuring that the supply chain delivers sustainable returns to primary producers.

“ABP, with its international sales footprint, is an ideal strategic fit to combine the expertise, resources, reach and presence of ABP and Fane Valley through the Slaney JV to compete successfully in that context,” they said.

Investigation

The Commission must be notified of any merger with an EU dimension prior to its implementation and an investigation is now underway.

After notification, the Commission has 25 working days to analyse the deal during a Phase 1 investigation. More than 90% of all cases are resolved in Phase I, generally without remedies. The Commission has said that the provisional deadline for the conclusion of the investigation of this case is October 7.

However, should the Commission decide a Phase 2 investigation is required an in-depth analysis of the merger’s effects on competition is required and this requires more time.

From the opening of a Phase II investigation, the Commission has 90 working days to make a final decision on the compatibility of the planned transaction with the EU Merger Regulation.

Farmer Concerns

The move has sparked serious concern among farm organisations in terms of both competition in the market and the concentration of the kill.

The IFA has said competition in the beef and lamb trade is always a contentious issue between farmers and factories.

It recently commissioned a report into the impact of the proposed merger on the Irish beef industry and it concluded that competition amongst beef processors would be significantly diminished particularly in the South Leinster region. It has submitted the report to the EU competition authorities.

It says farmers are rightly concerned with the over dominance of a number of major players at both processing and retail level.