Decision Nº M/11/037 from Competition and Consumer Protection Commission, 2012-01-10

• Jurisdiction: Ireland
• Parties: Connacht Gold Co-Operative Society Limited,Donegal Creameries plc
• Date: 10 January 2012
• Decision Date: 10 January 2012
• Decision Number: M/11/037
• Court: Commissioner for Environmental Information

Merger Notification No. M/11/037 – Connacht Gold/Donegal Creameries

DETERMINATION OF MERGER NOTIFICATION M/11/037 -

Connacht Gold/Donegal Creameries

Section 21 of the Competition Act 2002

Proposed acquisition by Connacht Gold Co-operat ive Society Limited of

certain wholly-owned subsidiaries together with a number of assets of

Donegal Creameries plc

Dated 10 January 2012

Introduction

1. On 1 November 2011, in accordance wi th section 18 of the Competition

Act 2002 (“the Act”), the Comp etition Authority (“the Authority”) received

a notification of a proposed acquisition by Connacht Gold Co-operative

Society Limited (“Connacht Gold”) of Glenveagh Agricultural Co-operative

Society Limited (“Glenveagh”) and Maybrook Dairy (Omagh) Limited

(“Maybrook”), wholly-owned subsidiaries of Donegal Creameries plc

(“Donegal Creameries”)

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, together with a number of assets of Donegal

Creameries.

2. The proposed transaction involves the acquisition of sole control by

Connacht Gold of the milk procurement and supply business of Donegal

Creameries (includi ng plant and machinery used for processing raw m ilk),

as wel l as it s agri-t rade retai l business. As part of the proposed

transaction, Connacht Gold is acquiring the assets of nine agri-merchant

stores located in the State including stock, computer equipment, motor

vehicles and fixtures and fittings. These assets also include the land and

buildings of one of the agri-merchant stores in Kill ygordon, Co. Donegal.

3. On 29 November 2011, the Authority served two Requirements for Further

Information on Connacht Gold and Donegal Creameries pursuant to

section 20(2) of the Act. This automatically suspended the procedu re for

the Authority’s Phase 1 assessment.

4. Upon receipt of the responses to the Requirements for Further

Information, the “appropriate date” (as d efined in section 19(6) of the Act)

became 12 December 2011.

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5. During the investiga tion, the Authority sought the views of customers who

purchase own-l abel and branded liquid milk and cream from the noti fying

parties on the likely competitive i mpact of the proposed tran saction. The

Authority also sought the views of customers ( mainly raw milk processors)

who purchase supplies of raw mil k from Donegal Creameries. The

Authority also sought the views of a competitor of t he merging parties.

Finally, the Authori ty sought the views of the Irish Farmers Associ ation

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Hereinafter, any reference to Donegal Creameries includes Glenveagh and Maybrook.

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The “appropriate date” is the date from which the time limits for making both Phase 1 and Phase 2

determinations begin to run.

Merger Notification No. M/11/037 – Connacht Gold/Donegal Creameries

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(IFA) about th e competi tive impact of the proposed transaction on raw

milk suppliers (i.e., dairy farmers) located in the North-West of Ireland.

6. The Authority requ ested and recei ved, on an on-going basis, further

information and clarifications from the notifying parti es.

7. Having considered all the available information in its possession, the

Authority has concluded that the proposed transaction will not

substantially lessen com petition in any market for good s or services in the

State.

The Undertakings Involved

Acquirer

Connacht Gold

8. Connacht Gold’s p rincipal activities relate to th e producti on of fresh dairy

products (i.e., liquid milk, cream, butter and, to a less er extent, cheese

and yoghurt). Connacht Gold procures raw milk from dairy farmers

located in the North-West of Ireland.

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The vast majority of Connacht

Gold’s raw milk suppliers are located in the following four counties:

Galway, Sligo, Mayo, an d Roscommon. Only […]% of Connacht G old’s raw

milk suppliers a re located i n Co. Donegal . Connacht Gold has no raw milk

suppliers located in Northern Ireland. […]% of Connacht Gold’s raw milk

suppliers are members of Connacht Gold.

9. Connacht Gold processes all of its raw milk of manufacturing quality

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internally in its processing plant in Ballaghaderreen, Co. Roscommon to

produce butter [and milk powders]. Conna cht Gold sells t hese butter [and

milk powder] products [primarily to th e Irish Dairy B oard for export

throughout the world].

10. Connacht Gold processes a ll of its raw milk of liquid q uality internally in i ts

processing plant in Barnasraghy, Co. Sligo to produce liquid milk and

cream products. Conna cht Gold sells these liquid milk and cream products

to retai lers in the Stat e und er th e b rands of “C onnacht Gold” and

“Freshfields”. Almost all of Connacht Gold’s sales of branded liquid milk

and cream pr oducts a re made in the North-West of Ireland. In cont rast,

Connacht Gold sells liquid milk and cream products t o retailers th roughout

the State for resale under their own private label brands.

11. Connacht Gold produces anim al feed in its rumi nant feed mill in County

Roscommon. It is also involved in timber processing through Earrai Coillte

Connacht Teo, a subsi diary based in Co. Galway. Connacht Gold is the

majority shareholder in Earrai Coillte Connacht Teo, holding […]% of its

shares.

12. Connacht Gold has 30 agri-trade retail stores in eight counties whi ch

specialise predominantly in the retail supply of agricult ural inputs (animal

feed, fertiliser, etc) to farmers. The breakdown by county is as follows:

Sligo (10), Mayo (8), Roscommon (5), Leitrim (3), and

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In the merger notification, the parties define the North-West of Ireland as follows: the counties of

Connacht (Sligo, Leitrim, Roscommon, Galway and Mayo) together with the Ulster counties based in

the State – Donegal, Cavan and Monaghan.

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Raw milk of manufacturing quality can only be used to produce manufacturing milk; it cannot be

used to produce liquid milk. Manufacturing milk is used as an input in the production of other dairy

products such as butter, skimmed milk powder, cheese, etc.