The Competition and Markets Authority has warned that a planned deal between a Scottish poultry feed supplier and another feed firm could lead to higher costs for farmers - and says it could launch an investigation into the deal.
ForFarmers and Edinburgh-based 2Agriculture - part of Boparan's 2 Sisters Food Group - are planning to combine their animal feed milling operations in a joint venture including 18 mills across the UK. Both firms manufacture and supply chicken and other types of poultry feed.
The CMA has now completed its Phase 1 investigation and says it has found the deal raises competition concerns in four areas across East Anglia, the North West of England, and North Wales. It says the merger "could lead to higher prices for poultry feed, lower quality feed or worse quality of service".
The regulator added: "While both businesses currently compete for customers within each of these local areas, the CMA is concerned that the combined business would not face sufficient competition after the merger.
"The CMA is also concerned that the joint venture could unfairly favour Boparan’s chicken farming and processing businesses, resulting in less choice for smaller chicken farmers and processors, who might rely on ForFarmers and Boparan for their chicken feed."
The CMA said it had received a number of complaints from customers and stakeholders about the possible impact of the joint venture.
The regulator found the merger gave rise to competition concerns in areas around four mills - Burston in Norfolk, Bury in Suffolk, Llay in North Wales, and Preston in North West England. It said the combined businesses would account for 50 to 60% of the supply of meat poultry feed to third parties in three of these local areas (Burston, Bury and Llay) and 40 to 50% in the fourth local area (Preston).
ForFarmers and Boparan now have five working days to submit proposals to address the CMA’s concerns. If those proposals do not satisfy the CMA, the regulator will move to an in-depth Phase 2 investigation.
Sorcha O’Carroll, senior director of mergers at the CMA, said: "Feed is the biggest expense faced by farmers when rearing chicken, the UK’s favourite meat.
"With food prices already increasing and the wider cost of living crisis, it is vital that we don’t allow a reduction in competition between poultry feed suppliers, which could make this situation worse - both for farmers and shoppers at the check-out."
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free .
