COMPETITION ISSUES REMAIN DESPITE EU COMMISSION DECISION ON SLANEY

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COMPETITION ISSUES REMAIN DESPITE EU COMMISSION DECISION ON SLANEY
07 Oct 2016

COMPETITION ISSUES REMAIN DESPITE EU COMMISSION DECISION ON SLANEY

Cattle, Economics, IFA in Brussels, Sheep

IFA President Joe Healy said the serious issues around competition in the beef sector, highlighted in the PMCA report commissioned by IFA into the ABP/Slaney deal, have not gone away and must be addressed to have a sustainable and profitable beef sector for Irish livestock farmers.

The IFA President was responding to reports of a decision by DG Competition in Brussels today to clear the way for the ABP/Slaney deal.

Joe Healy said farmers cannot understand why the Irish Competition and Consumer Protection Commission (CCPC) refused to investigate the case. He said, “The CCPC turned a blind eye to the serious competition issues in the Irish market for the purchase of cattle. They effectively washed their hands of the ABP/Slaney deal by leaving it to the Brussels authorities”.

The IFA Livestock Chairman Angus Woods said livestock farmers are extremely concerned over the lack of competition for cattle. “The reality today is farmers are selling at a loss making base price of €3.70/kg, with some factories claiming they cannot take stock for another week, at which point the price may be lower. At the same time, prices for the equivalent beef animals in our main export market in the UK are rising and making £3.64/kg, or €4.30/kg, which is €220 per head more than Irish prices.”

The main conclusion of the PMCA report is that the market for farmers selling cattle is characterised by weak competition and the ABP/Slaney deal is likely to weaken competition even further, through a ‘substantial lessening of competition’ (SLC).

He said the report outlines that the chief concern over the proposed transaction is that it would make co-ordinated effects in the relevant markets more likely. “The report is very clear on the competition concerns in the beef sector, the income pressures that exist for livestock producers and the impact that any weakening of competition would have on their livelihoods.”

The PMCA report pointed out that ABP and Slaney combined currently account for 25.8% of all cattle slaughterings in the state. When the market is narrowed down to premium cattle of steers and heifers meeting the MII grade and weight specifications, this figure rises to 36.2% of cattle. However, the analysis also shows that when the more narrow relevant market of the South Leinster region is used, ABP and Slaney combined would have 44% of the premium cattle kill.

On sheep meat, the report points out that Slaney/ICM is the largest processor of sheep/lamb meat in the State, with around 40% of the kill. The report also raised serious competition concerns over vertical integration including rendering and factory feedlot cattle.

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