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50/00
29 September 2000
NUTRECO HOLDING BV/NORSK HYDRO ASA MERGER INQUIRY
STATEMENT OF POSSIBLE REMEDIES
The Competition Commission (CC) has sent remedies letters,
on a purely hypothetical basis, to the main parties in its inquiry into
the proposed Nutreco BV/Norsk Hydro ASA merger.
The CC has as yet reached no conclusions on any matter,
in particular as to whether the proposed acquisition by Marine Harvest
(Scotland) Ltd (MH), a subsidiary of Nutreco Holding BV (Nutreco), of
Hydro Seafood GSP Ltd (GSP) from Norsk Hydro ASA (Norsk Hydro) might be
expected to operate against the public interest. However, were the CC
to reach any adverse finding on the acquisition, it would wish to make
appropriate recommendations for remedies to the Secretary of State. This
statement of hypothetical remedies is being made public to inform all
interested persons, should they wish to comment or to raise further points
with the CC within the next week.
As foreshadowed in the Issues Statement, published on
5 September 2000, four possible types of recommendation are being raised
with the parties:
- not allowing the merger to proceed;
- structural remedies;
- price controls;
- other behavioural undertakings.
These recommendations would be designed to address one
or more of the matters set out in the Issues Statement, in particular
any adverse effects on competition in the smolt, salmon farming or salmon
feed markets.
Not allowing the merger to proceed
What would be the impact on competition in the markets
for smolts, salmon farming and salmon feed if the merger were not allowed
to proceed.
Structural remedies
- Whether the whole businesses of either MH or GSP should be divested.
- Whether either or both of GSP and MH should be required to divest
(a) a percentage of their production capacity; or (b) specified production
sites licensed to them; or (c) specified areas where they undertake
salmon farming; such divestment to take place over a period to be specified.
- Whether Nutreco should be required to divest one or more of its feed
plants located in the UK.
Price and other controls
- Whether, in order to address any possible adverse effects on competition
in the sale of gutted salmon, measures should be put in place to prevent
price discrimination by the merged company. For example, whether it
should be a requirement that prices charged by the merged company to
any single customer on spot sales or forward contracts should not exceed
by more than a specified percentage the average price on spot sales
or forward contracts to all customers.
- Whether, in order to address the issue of possible adverse effects
on competition in the sale of salmon feed, the merged company should
undertake to adhere to published price lists on feed. Whether such prices
should apply to all customers, including MH and GSP.
- Whether maximum market share thresholds for the merged company should
be set in the smolt, salmon farming or salmon feed markets. Whether
the merged company should, for a specified period, provide information
to the DGFT on the market share of the merged company in the smolt,
salmon farming or salmon feed markets.
- Whether undertakings should be given to the Secretary of State by
the merged company to limit the annual amount of salmon production that
it sub-contracts to independent farmers. Such limitation might be expressed
either as an absolute amount of production capacity that could be sub-contracted,
or as a specified proportion of the merged company’s total salmon
production in the UK.
Other behavioural undertakings
- Whether undertakings should be given to the Secretary of State by
the merged company either not to make, or to refrain from making, the
provision of any products or services in connection with the production
of farmed salmon conditional upon the acceptance of other products or
services: for example, making the supply of smolts conditional upon
the supply of feed, or the supply of feed conditional upon the use of
particular veterinary medicines or treatments.
- Whether undertakings should be given to the Secretary of State by
the merged company to purchase a specified proportion of its annual
feed requirements from feed producers other than Nutreco and its subsidiaries.
- Whether undertakings should be given to the Secretary of State by
the merged company:
- to purchase a specified proportion of its annual smolt requirements
from independent smolt suppliers; or
- to restrict to certain specified quantities its sale of smolts to
third parties.
This press notice is also available on the Competition
Commission web site: www.competition-commission.org.uk/50-00.htm
or from the Joint Reference Secretary (Nutreco/Hydro Seafood Inquiry),
Room 338, New Court, 48 Carey Street, London WC2A 2JT.
Notes to Editors
- The Nutreco/Hydro Seafood reference was made by the Secretary of State
for Trade and Industry, under Section 64(8) of the Fair Trading Act
1973, on 17 July 2000 (see DTI press release P/2000/495). No conclusions
will be reached about whether any matters may be expected to operate
against the public interest until the Commission submits its report
to the Secretary of State for Trade and Industry on 16 November 2000.
- The Issues Statement was set out in Competition Commission News Release
45/00, dated 5 September 2000.
- The inquiry is being chaired by Dr Gill Owen, one of the Commission’s
members. The other members are Graham Hadley and Judith Hanratty.
- Further information can be obtained from the Competition Commission
website at www.competition-commission.org.uk/ref.htm
- Press enquiries should be directed to:
Francis Royle, Press Officer Tel: 020 7271 0242
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