Completed acquisition by Dairy Farmers of Britain Limited of Associated Co-operative Creameries Limited

Affected market: Milk and other dairy products

No. ME/1308/04

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

The OFT's decision on reference under section 22 given on 3 December 2004.

PARTIES

Dairy Farmers of Britain Limited (DFB) is an Industrial & Provident Society with approximately 3,250 members.  It procures raw milk from its members and either sells it to processors or processes it at one of its own processing sites.

Associated Co-operative Creameries Limited (ACC) is an Industrial & Provident Society operating primarily in the processing of raw milk into a range of dairy products. ACC's ultimate parent was the Co-operative Group (CWS) Limited (the Co-operative Group).  ACC's turnover for the last financial year was approximately £460 million.

TRANSACTION

DFB has acquired the business of production, marketing and distribution of milk and dairy products carried on by the Co-operative Group in the name of ACC and the entire issued share capital of ACC.  The transaction completed on 10 August 2004 and the statutory deadline expires on 9 December 2004. 

JURISDICTION

As a result of the transaction DFB and ACC have ceased to be distinct.  The UK turnover of ACC exceeds £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied. The OFT therefore believes that it is the case that a relevant merger situation has been created.

ASSESSMENT

In all of the areas where the activities of the parties overlap, combined shares of supply are relatively low and do not give rise to competition concerns.  The vertical integration aspects of the transaction also do not raise competition concerns.  With regard to possible foreclosure effects, responses from farmers confirmed that there remains a choice of potential purchasers of raw milk.  Third parties were generally unconcerned by the 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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