The Competition and Markets Authority (CMA) said it is concerned that the combined business would not face sufficient competition after the merger.
The regulatory body will refer the proposed JV to a phase 2 investigation unless the two entities involved can offer “acceptable undertakings” to address the competition concerns.
The planned tie-up was first announced by ForFarmers, a European manufacturer and supplier of animal feed, based in the Netherlands, on July 1, 2022. 2Agriculture is one of the UK’s largest suppliers of poultry feed by volume produced and uses its production to supply Hook 2 Sisters, a company affiliated with Boparan, as well as farmers on the open market.
Initial review findings
Following its Phase 1 investigation of the impact of such a merger, the regulator determined that the deal raises competition concerns in four local areas across East Anglia, north-western England, and North Wales where it could lead to higher prices for poultry feed, lower quality feed or worse quality of service.
The review idenfiied potential competition concerns in locations around four of the feed mills operated by the combined businesses, namely in Burston, Bury, Llay and Preston. The combined businesses would account for 50 to 60% of the supply of meat poultry feed to third parties in three of these local areas - Burston, Bury and Llay - and 40 to 50% in the fourth local area - Preston.
The CMA is also concerned that the joint venture could unfairly favor 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.
Customer complaints
Additionally, the CMA said it has received complaints from customers and other market participants in relation to the impact the JV could have on choice of feed suppliers and poultry feed prices.
Sorcha O’Carroll, senior director of mergers at the CMA, said: “Feed is the biggest expense faced by farmers when rearing chicken. 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.”
