Anticipated acquisition by Prosper De Mulder Limited of Canterbury Mills Limited

Affected market: Animal waste rendering

No. ME/3445/07

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 18 January 2008. Full text of decision published 28 January 2008.

PARTIES

Prosper De Mulder Limited (PDM) provides a national integrated animal waste collection and processing business covering edible meat products. It handles past sell by date edible food through to high risk and condemned animal waste. PDM operates five rendering plants located at Silvertown (East London), Widnes, Exeter, Nuneaton and Nottingham. The plant at Nottingham processes only poultry waste the remaining plants all process red meat animal waste.

Canterbury Mills Limited (CML), a subsidiary of Cheale Meats Limited, operates a Category 1 animal waste rendering plant located at Canterbury, Kent. The majority of its waste is delivered to its plant by third parties for processing. CML's UK turnover is £3 million.

TRANSACTION

PDM proposes to acquire the whole of the issued share capital of Canterbury Mills.

The parties notified the OFT by way of a Merger Notice on 4 December 2007. The statutory deadline expires on 18 January 2008. 

JURISDICTION

As a result of this transaction PDM and CML will cease to be distinct. The parties overlap in the supply of animal waste rendering and 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

The third parties who responded to the OFT were largely unconcerned. There was mixed evidence from third party customers regarding the ease of switching. A competitor told the OFT that it was not difficult to gain customers. Overall, the OFT did not receive any substantive concerns from either customers or competitors.

ASSESSMENT

The parties overlap in the supply of animal waste rendering. On a wide geographic basis of England and Wales the parties have a post-merger share of supply of around 35 per cent with an increment of around 3 per cent. On a regional basis comprising the South East of England, the parties have a share of supply of 100 per cent post merger in the South East with an increment of about 25 per cent.

On a regional basis the parties operate the only two rendering plants in the South East. However, the parties' plants are licensed to handle different categories of materials and therefore they do not compete for the same customers. Canterbury Mills only undertakes work on a sub-contract basis for other renderers and therefore does not solicit upstream customers in the same way as does PDM. Finally, PDM has sold its Silvertown plant and will vacate the plant in 2010. Therefore, one rendering plant will remain in the South East regardless of what happens in this merger. At the national level, such a small increment is not expected to give rise to a substantial lessening of competition. Even if the market was limited to processors of category 1 waste alone, there are a number of other competitors that have category 1 plants closer to Canterbury Mills (and, therefore, are closer alternatives) than does PDM.

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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