Commission cracks egg merger

24 April 2007
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25 April 2007 | Paul Snell

The Competition Commission has demanded the break-up of a merged egg supplier to keep the market competitive.

The regulator has ordered Noble Foods to sell Clifford Kent Holdings, the parent company of Stonegate Farmers, because the merger between the two companies would reduce competition in the egg market.

Noble Foods was formed when Stonegate Farmers merged with Deans Food Group in June 2006. The group had hoped the merger would make them more cost efficient.

The commission said the merger could potentially mean an increase in the price of eggs to retailers and wholesalers from all suppliers.

In addition, it said the merger might give the company too much purchasing power when buying eggs from farmers. A lack of rivalry in the market could also threaten supplies to retail buyers.

Noble had argued the existence of smaller firms meant retailers would have the option to switch supplier. But the commission disagreed and said the potential for switching would be "much reduced" by the merger.

The commission said the sale of Stonegate to a viable competitor would recreate two "substantial" suppliers in the market.

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