Anticipated acquisition by G's Marketing Ltd of Norman Olverson Ltd

Affected market: Cooked and raw beetroot

No. ME/2832/07

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

The OFT’s decision on reference under section 33(1) given on 27 February 2007. Full text of decision published 8 March 2007.

Please note that square brackets indicate text or figures which have been deleted or replaced with a range at the request of the parties and third parties for reasons of commercial confidentiality.

PARTIES

G's Marketing Limited (G's Marketing) is a producer and supplier of fresh fruit and vegetables. It has a wholly owned trading subsidiary, G's Fresh Beetroot Limited (G's), which is primarily active is the production of vacuum packed and fresh cooked dipped beetroot. It is also involved in the sale of raw beetroot. Its turnover in year ending 8 April 2006 was £9.96 million.

Norman Olverson Limited (Olverson) is a UK company which is primarily active in the production of vacuum packed and fresh cooked dipped beetroot. It is also involved in the sale of raw beetroot. Its turnover in the year ending 31 October 2005 was £3.96 million.

TRANSACTION

G's Marketing proposes to acquire the entire issued share capital of Olverson. The parties notified the transaction by way of a Merger Notice on 16 January 2007. The statutory deadline is 27 February 2007.
 
JURISDICTION

As a result of this transaction G's Marketing and Olverson will cease to be distinct. The parties overlap in the supply of vacuum packed and fresh cooked dipped beetroot and have combined shares of supply in the UK in excess of 25 per cent, so the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation.

THIRD PARTY VIEWS

All but one third party were unconcerned by this transaction. The customers stated that they considered they had sufficient alternative options available to them. One competitor expressed concerns that as G's supplies a wide range of salad vegetables to supermarkets, post-merger it will become increasingly difficult for smaller suppliers to supply supermarkets. However the OFT believes evidence submitted by the parties and customers shows that the choice of supplier is based on the price and quality of the beetroot, irrespective of whether an additional range of products (such as other salad vegetables) was being supplied.

ASSESSMENT

The parties overlap in the supply of raw beetroot, vacuum packed beetroot and fresh cooked dipped beetroot. In relation to raw beetroot, the overlap is small and there are a number of other competitors present, therefore competition concerns do not arise.

With regards the supply of vacuum packed beetroot, there will continue to be a number of other UK suppliers and French importers present who will to act as a constraint G's behaviour post-merger. No customer was concerned.

For the supply of fresh cooked dipped beetroot, although the merger combines the largest and third largest suppliers of this product, there have been no concerns raised by customers. The constraint imposed by the remaining competitor and some consumer switching to vacuum packed beetroot, combined with the potential for new entry and expansion are all considered by the OFT to pose a sufficient constraint on G's behaviour post-merger.

Consequently, the OFT does not believe that it is or may be the case that the merger 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 33(1) of the Act.

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