Official: European Commission approve ABP/Slaney deal

The European Commission’s competition authority has reached a decision on the ABP/Slaney deal.

The European Commission has cleared unconditionally, after an investigation under the European Union Merger Regulation, the proposed acquisition of joint control of Slaney Foods by meat processor ABP Group and farmer-owned agri-food company Fane Valley.

The Commission concluded that the proposed acquisition would not adversely impact effective competition in the EU’s Single Market.

The Commission’s investigation focused in particular on the impact of the proposed transaction on competition in the markets where the activities of the parties overlap.

These include:
  • The purchasing of live cattle for slaughter in Ireland by ABP and Slaney Foods
  • Purchasing of live sheep and lambs for slaughter in Ireland and Northern Ireland by ABP, Slaney Foods and Fane Valley
  • Sale of fresh beef, lamb and mutton in Ireland, including to industrial processors and the sale of fresh lamb and mutton meat in Belgium, including to supermarkets by ABP and Slaney foods
  • Collection of animal by-products, generated by the slaughtering activities, in Ireland by ABP and Slaney Foods

The Commission concluded that the transaction would not raise competition concerns in relation to any of these markets.

In terms of the potential impact on the markets for purchasing live cattle, the Commission assessed any potential increase of the slaughterhouses’ buyer power to the detriment of farmers, which could affect in particular local farmers’ communities.

The Commission found that farmers in Ireland tend to sell within a rather broad geographic radius and that they are able to switch slaughterhouses if they can get better prices for their animals.

Various slaughterhouses with spare capacity will continue to operate in Ireland, it says, including in the southeast area, where the Slaney Foods cattle slaughtering facility is located.

The Commission thus found that farmers will continue to have sufficient alternative buyers for their animals after the merger.

The Commission also assessed the potential impact on competition in the downstream markets relating to the sale of fresh meat.

The investigation found that a number of strong competitors will remain active after the merger.

The Commission therefore concluded that the parties will not be able to increase prices or impose detrimental conditions on retailers and industrial meat processors and ultimately on consumers.

As regards the collection of animal by-products generated by slaughtering activities in Ireland, the Commission found that the volumes of animal by-products that competing renderers currently collect from the Slaney Foods/Fane Valley are modest.

The investigation also showed that, after the merger, rendering plants would continue to have sufficient access to animal by-products.

Finally, the Commission found that the transaction was unlikely to have a negative impact on slaughterhouses in relation to their disposal of animal by-products.

ABP and Fane Valley Group welcome the decision

ABP Food Group and Fane Valley Group have welcomed the decision by the Commission to approve the Slaney Foods joint venture.

Commenting on the decision Frank Stephenson, CEO ABP Food Group, said: “The joint venture will enable both ABP and Fane Valley, through the Slaney Foods joint venture, to grow our respective businesses by bringing a stronger product offering to international markets where we compete with much larger global players.

“Today’s decision, which follows a thorough evaluation by the DG for Competition at the EU Commission, will allow the parties to enhance an already highly competitive beef processing sector in Ireland and to grow their main export markets through the JV.

“This transaction has always been about securing better international markets for meat products and developing an industry that needs to evolve to remain relevant and compete effectively on the global stage,” he said.

Trevor Lockhart, CEO Fane Valley Group stated: “This is a positive outcome for the respective businesses and a step in the right direction for the red meat industry in Ireland.

“It is imperative for the long term sustainability of the sector that we develop highly effective business models that maximise the opportunities to sell quality beef and lamb from Ireland in the international marketplace.

“That has been the combined goal of ABP and Fane Valley from the very outset,” he said.

What does the decision mean?

The decision will give the ABP Group control of 50% of Slaney Foods beef operations, along with a 50% share of Irish Country Meats’ sheepmeat processing capacity.

Currently, both ABP and Slaney account for 28.5% of all cattle slaughterings in Ireland. In 2015, ABP slaughtered approximately 340,000 head of cattle, while Slaney processed almost 94,000 head.

But when the market is narrowed down to premium cattle (steers and heifers) meeting Meat Industry Ireland grade and weight specifications, this figure rises to 36.2% of cattle.

The purchase will also see ABP having a hand in 40% of the national sheep kill and 50% of the State’s rendering capacity.

Farmers concerns

Back in early September, the notification of the possible merger had sparked serious concerns among farm organisations in terms of both the competition in the market and the concentration of the kill.

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

To highlight the possible negatives of the dead, it commissioned a report into the impact of the merger on the Irish beef industry and it concluded that competition amongst beef processors would be significantly diminished particularly in the South Leinster region.

The report said that farmers are rightly concerned over the dominance of a number of major players both at processing and retail level.

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