Affected market: Seafood
No. ME/1178/04
Please note that the full text of the decision can be downloaded by using the link on the right of this page . What follows are extracts regarding the parties, the transaction, jurisdiction, assessment and decision.
PARTIES
Young's Bluecrest Seafood Ltd (YBS) is a leading seafood manufacturer. It was formed in 1999 by the merger of Young's and Bluecrest. Its brands include Young's, Macfish and Ross (licensed from Heinz). Over two-thirds of its production is for own-label retailers such as Sainsbury, Somerfield and Iceland.
Macrae Food Group Ltd and Pan European Seafoods UK Ltd (Macrae) was founded in 1993 following a management buy-out from Foodmark. It supplies ready-to-eat (RTE) seafood products. On a smaller scale it supplies chilled fresh fish and ready-to-cook (RTC) seafood products. Macrae's UK turnover for the year ending September 2003 was £77.5 million.
TRANSACTION
On 30 June 2004, YBS acquired the entire share capital of Macrae. The parties notified the transaction on 14 July 2004 and the administrative deadline expires on 27 September 2004.
ASSESSMENT
The parties' pre-merger operations are largely complementary, with YBS primarily active in fresh fish and RTC seafood products and Macrae focusing on RTE seafood products. However, the parties overlap in three segments, namely RTC seafood products, RTE seafood products and fresh fish. With respect to the supply of RTC seafood products and fresh fish, the overlaps between the parties are small.
The more significant impact of the merger is in the RTE seafood products segment where shares of supply are relatively high (when considered on a product-by-product basis). However, a number of alternative suppliers remain post merger. This is evidenced by the fact that neither of the merging parties supplies one of the leading UK supermarkets. Furthermore, non-seafood RTE products place at least some competitive constraint on suppliers and will continue to do so post-merger.
Whilst sizeable entry may be hindered to some extent by overcapacity and the need to obtain supermarket listings, barriers to entry on a small scale are not particularly high in any of the product segments and it is not necessary for a supplier to be able to supply a full range of products to obtain a listing with the large retailers. Evidence suggests that some large customers prefer to source supplies from producers of niche products because they are more specialised and focused on product development and have specialised skills and local knowledge.
In addition, retailers benefit from countervailing buyer power over seafood suppliers who are very dependent on sales through the supermarket channel.
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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