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OFT refers merger between Stonegate Farmers Ltd and Deans Food Group Ltd

134/06    13 September 2006

The OFT today referred the merger between the UK's two principal egg suppliers, Stonegate Farmers Limited and Deans Food Group Limited, to the Competition Commission (CC).

The OFT has decided that the test for reference is met in relation to the supply of shell eggs and processed eggs in the UK.

John Fingleton, OFT Chief Executive, said:

'UK consumers spend over £500 million on over 5 billion eggs each year. Processors use a further 2.5 billion eggs each year. This merger has given Noble Foods around 60-70 per cent of supply to retailers and over half of the supply of liquid eggs to processors, and the OFT is concerned about the reduction in competition as a result.'

The parties offered undertakings in lieu of a reference to the CC, but the OFT did not regard these as being sufficiently clear cut to address the competition concerns raised by the merger.

NOTES

1. The Reference Test - The OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that a relevant merger situation has been created; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

2. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

3. The CC may extend the 24 week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

4. The text of this decision will be published in the mergers section as soon as is reasonably practicable.

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