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Supermarkets Crack Egg Merger

by 5m Editor
23 April 2007, at 8:57am

UK - A merger that created Britain's biggest egg processor is to be unscrambled in a move widely viewed as another victory for supermarket retailers over the farming community.

Retailers had argued that their ability to switch suppliers would be reduced by the merger

Deans Foods and Stonegate, the UK's largest egg packers and processors, merged in June 2006 to form Noble, which controls 70pc of the British egg market. Deans was roughly three times the size of Stonegate prior to the merger, with annual sales of £314m against £103m.

But, following a final ruling from the Competition Commission, Noble must now sell Stonegate to maintain competition in the UK fresh egg market.

The reason this is such a victory for supermarket retailers over farmers is that the enlarged company, it was hoped, would have had enough clout to negotiate better prices with the major food chains, such as Tesco and J Sainsbury.

However, some retailers had argued that their ability to switch to alternative suppliers would be reduced as a result of the merger, as they would be unable to source enough eggs from other suppliers.

Both arguments were presented to a Competition Commission inquiry, chaired by judge Dame Barbara Mills, late last year.

Source: Telegraph.co.uk

5m Editor