Decision Nº M/11/001 from Competition and Consumer Protection Commission, 2011-03-23

• Jurisdiction: Ireland
• Date: 23 March 2011
• Submitted Date: 07 January 2011
• Decision Date: 23 March 2011
• Parties: Greencore Group plc,Northern Foods plc
• Decision Number: M/11/001
• Court: Commissioner for Environmental Information

Merger Notification No. M/11/001 – Greencore/Northern Foods

DETERMINATION OF MERGER NOTIFICATION M/11/001 -

Greencore/Northern Foods

Section 21 of the Competition Act 2002

Proposed merger of Greencore Group p lc and Northern Foods plc

Dated 23 March 2011

Introduction

1. On 7 January 2011, in accordance with section 18 of the Competition

Act 2002 (the “Act”), the Competition Authority (the “Authority”)

received a notification of a p roposed merger of Greencore Group plc

(“Greencore”) and Northern Foods plc (“Northern Foods”) resulting in

the creation of a new merged entity, Ess enta Foods plc (“Essenta”).

2. The proposed transaction involves the merger of the whole of both

Greencore and Northern Foods. Greencore’s shareholders and

Northern F oods’s shareholders will each, on a fully diluted basis, hold

50%

of the share capital of Essenta.

3. On 2 February 2011, the Authority served two Requirements for

Further Information on Greencore and Northern Foods pursuant to

section 20(2) of the Act. This automatically suspended the proc edure

for the Authority’s phase one assessment.

4. Upon receipt of the responses to the R equirements for Further

Information, the “appropriate date” (as defined in section 19(6) of the

Act) became the 28 February 2011.

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The Undertakings Involved

Greencore

5. Greencore has two divisions: Convenience Foods and Ingredients &

Related Property. In the United Kingdom, the Convenience Foods

division supplies many of the maj or retailers across a range of prod ucts

including “Food to Go” (“FtG”) (i.e., sandwiches, meal salads, and

sushi), chilled ready meals ( “CRM”)

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, chilled soups and sauces, ambient

sauces and pickles, cakes and desserts, a nd Yorkshire puddings.

6. In the State, t he Convenience Foods division is involved in the FtG and

CRM sectors. A ll of Greenc ore’s F tG and CRM p roducts are

manufactured in t he United Ki ngdom. They are sold into the State

either through a single distributor, Brennan Co nvenience Foods Limited

t/a Food Partners, w hich re-sells to i ndependent retailers or through

retailers in the United Kingdom wh o distribute the products to their

own outlets in the State.

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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.

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Greencore is licensed to manufacture the Weight Watchers CRM brand.

Merger Notification No. M/11/001 – Greencore/Northern Foods 2

7. Greencore's Ingredients & Related Property division comprises Trilby

Trading, Premier M olasses and a small team focused on maximising

the value of Greencore's legacy property assets. Greencore also has

an associate holding in United Molass es (Ireland). Trilby T rading is an

importer and distributor of bulk vegetable oils to the food industry in

the State.

8. Premier Molasses and United Molasses (Ireland) are suppliers of

imported liquid feed ingredients in the State with storage facilities at

Foynes, Ringaskiddy and Belfast. Molasses is blended and mixed at

each storage facility to meet the specific requirements of customers in

the animal feed compound industry.

9. For t he year ending 24 September 2010, Greencore’s worldwide

turnover w as €856 million. Greencore’s turnover in the State for the

same period was €96 million.

Northern Foods

10. Northern Foods has two divisions: Chilled a nd Branded. Th e Chilled

division manufactures own-label FtG and CRM products wh ich it sells to

some of the United Kingdom’s largest retailers and, by extension, to

those retailers’ Irish stores. The product ranges sold in the State by

Northern Foods reflect the selections made by retailers in the United

Kingdom (e.g., […] and […]). No specific products are made by

Northern Foods for the Irish retail market.

11. The Branded division manufactures frozen fish (Donegal Catch ), pizzas

(Goodfellas, G reen Isle), pies (Hollands a nd McDouga lls), biscuits

(Fox's) and Christmas puddings (Matthew Walker). Since Gr eencore

does not manufacture any of these products, there is no overlap

between the parties in relation to them.

12. For the year ending 3 Apri l 2010, Northern Foods’ worldwide turnover

was £977 million (€1, 172 million)

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. Northern Foods’ turnover in the

State for the same period was £110 million (€1 32 million).

Rationale for the Proposed Transaction

13. The parties state that the propos ed merger will combine two highly

complementary businesses (spread across a number of categories in

both branded and non-branded segments) t o create a business with a

well-balanced product portfolio a nd a c ustomer base which includes all

major food retailers in the United Kingdom and Ireland. The parties

state that the proposed merger w ill also offer the pote ntial for growth

in the United States on the back of Greencore’s chilled prepared food

business in the United States.

14. The parties state that the proposed merger will:

 combine two co mplementary customer bases to create a

substantial operator in two of the most attractive convenience

food categories: FtG and CRM;

 combine significant category positi ons in the United Kingdom in

the m anufacture of quiches, chilled pizzas, pies, chilled sauces

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Based on average annual exchange rate of £1 sterling = €1.2 euro for 2010.