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Details of Vion and 2 Sisters deal revealed

Details of Vion and 2 Sisters deal revealed

The Office of Fair Trading (OFT) has released a report outlining a number of details in the merger involving Vion and 2 Sisters, with the regulator emphasising that the deal did not have to be referred to the Competition Commission.

According to the report, which was compiled to ensure that the agreement did not create an unfair advantage in the market, the 2 Sisters Group held between 30 and 40 per cent of chicken sales in the UK before the purchase of Vion, which saw it gain another ten per cent.

It also found that a lost contract with Sainsbury's by Vion in March 2012 made it vulnerable to a takeover due to it being worth around 30-40 per cent of the business.

The OFT found that this development could be solely responsible for seeing the company exit the UK market.

The new contract has since been split between 2 Sisters and another company, Moy Park.

The report also outlined a total of three concerns that were raised by third parties, with the first being that the merger would cut the number of major competitors supplying fresh chickens in the UK from three to two, with the other supplier being Moy Park.

One alleged consequence was that firms such as Sun Valley and Faccenda would therefore not be effective competitors within the market.

Finally there was a level of concern that the merger would lead to the removal of competitive quotes made by Vion in various contract negotiations.

But the OFT said that it was satisfied that there would be sufficient competition from other third party companies after the merger was completed.

It also noted that Vion had listed five companies which it regarded as being direct competitors, including Sun Valley Faccenda and Banham, despite all three being substantially smaller.

The OFT also dismissed the idea that Vion was 2 Sisters' most successful competitor in terms of contract wins.

Analysis found that Moy Park won 40-50 per cent of contracts during January 2012 and March 2013, while Banham and Faccenda obtained ten-20 per cent, while Sun Valley and Vion made no more than ten per cent.

 

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