Africa-Press – Eswatini. The Eswatini Competition Commission has approved the acquisition of Umbuluzi Farm Chickens (Pty) Ltd and Umbuluzi Farm Properties (Pty) Ltd by Ngwane Mills (Pty) Ltd trading as Feedmaster.
The acquiring firm is Ngwane Mills (Pty) Ltd, a private company registered in accordance with the laws of the Kingdom of Eswatini and having its principal place of business at King Mswati III Avenue, West, Matsapha Industrial Site. Ngwane Mills trading as ‘Feedmaster’ is a manufacturer and supplier of animal feed. It operates a fully automated Buhler plant, which produces all mono-gastric and ruminant feeds for chicken broilers, pigs, cattle and breeders. It has been operating in Eswatini since 1991 and selling animal feed products in Eswatini.
The Feedmaster brand is one of the oldest and strongest in the Eswatini animal feed market. The target firms are Umbuluzi Farm Chicken and Umbuluzi Farm Properties collectively referred to as Umbuluzi Farm. Umbuluzi Farm is not a broiler chicken producer or operator, but a chicken abattoir owned by six equally big contract growers.
The commission considered the products of the firms and concluded that there were three relevant markets, which were; the production and distribution of broiler chicken feed in Eswatini; the production and distribution of broiler chickens by contract growers in Eswatini; and the retailing of fresh, frozen and packaged broiler chicken products by Lojaf (Pty) Ltd in Eswatini. In its analysis, the commission considered the activities of the merging parties and found no horizontal overlaps. The acquiring firm does not farm, slaughter or distribute chickens. The transaction is categorised as a phase III merger because of the verticality that is created as a result of the proposed transaction. The verticality comes about as a result of Ngwane Mills being the manufacturer and supplier of broiler chicken feed, supplying the contract growers who are shareholders of Umbuluzi Farm. The proposed transaction will result in the formation of a three-layer market for the merging parties. This formation includes feed millers, contract chicken growers and retailers of fresh, frozen and packaged broiler chicken products.
Overlaps
The commission found no horizontal overlaps in the relevant markets and therefore the transaction will not give rise to unilateral effects. The commission also concluded that there was no coordinated conduct potential, as the structure of the market will not make it possible. However, the proposed transaction will impact the structure of the market due to the verticality that it creates in the production and distribution of broiler chicken feed (upstream), as well as the production and distribution of broiler chickens by contract growers (downstream). The application of the reevaluation will be submitted to the Board of Commissioners with recommendations by the Secretariat.
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