The Commission authorised the acquisition of SS Poultry Agrotech Limited by Central Poultry (2000) Limited. The two companies were involved in the supply of Day Old Chicks.
The Commission’s assessment of the transaction established that the merger would result in a change in the market concentration of the poultry industry. Post-merger, the market share of Central Poultry would increase to 38% thereby raising concerns on the potential for misuse of power. The analysis further established that the poultry industry is characterised by high barriers to entry and absence of import competition. However, on the positive front, the analysis showed that the transaction would bring efficiency gains in terms of production capacity which would effectively reduce the waiting period for day old chicks. It was also established that the transaction would save the target firm from collapse. The Commission determined that these findings weakened the competitive constraints for the merged entity.
Based on these findings, the Commission authorized the proposed merger subject to the following conditions:
- That Central Poultry would not monopolize the supply of Day old chicks by supplying half of the additional supply to its customers;
- That Central Poultry would uphold their commitment to enter into contracts with small scale producers for technical and training assistance in the production of broilers.
- That Central Poultry would maintain current employment levels at the merged entity. Where it would be absolutely necessary to retrench, due process would be followed and payments shall be made according to the country’s labour laws.
- That the parties would be under the surveillance of the Commission, as such a Memorandum of Understanding will be signed to ensure compliance.