The Commission has nonetheless concluded that the transaction would not significantly impede effective competition in the various markets where the parties are active. It focused its investigation on the market for slaughtering of pigs, which represents the bulk of the parties' activity, and in particular, on whether, after the merger, the new company would have sufficient market power to depress the price paid to farmers delivering pigs to slaughterhouses.
To do so, the Commission investigated to what extent farmers and other suppliers of pigs to slaughterhouses in the Netherlands can supply pigs to Belgium and North Western Germany. The Commission found that there are no significant barriers for pig suppliers to switch to slaughterhouses across the border and that exports of pigs are significant and do vary in the short and medium term, which indicate that suppliers can switch according to market conditions.
The Commission also looked into transport costs, export-related veterinary requirements and national preferences and found that none of these factors raise barriers to live pig exports. As a result, the market position of the merged entity will not allow it to determine/depress purchasing prices of pigs paid to Dutch pig farmers.
In the markets for meat sales to the various categories of customers (supermarkets, industrial processors etc.) the Commission has found that the new company will face effective competition from a variety of market players operating at national, regional and European level.
Sovion (formerly known as Best Agrifund) is a Dutch company active, through a great number of subsidiaries (such as Dumeco, Bestmeat, Sobel, Rendac) in a variety of sectors, most importantly slaughtering of pigs and cattle, the processing, production and sale of meat products and processing of abattoir by-products as well as the production and sale of products made from abattoir by-products (such as gelatine). Sovion is mainly active in The Netherlands, Germany and Belgium.
Hendrix Meat Group is active in the slaughtering of pigs and the processing, production and sale of meat products. HMG's main geographic focus is the Netherlands.
Only Sovion is active in the processing and disposal of abattoir-by-products (blood, bones, pigskins etc) through a number of subsidiaries (such as Rendac, Harimex, Sonac Burgum, Smits Vuren). HMG is not a processor of by-products and delivers almost all its abattoir-by-products to Sovion for treatment.
The Commission therefore concluded that the various vertical relationships between the two parties do not create competition concerns. In particular, the new company will not be in a position to raise competing slaughterhouses' costs by restricting access to its treatment facilities, nor will it be in a position to restrict access to those abattoir-by-products that are used as raw material for the production of downstream products like gelatine, plasma, or haemoglobin.