NUTRECO HOLDING BV/NORSK HYDRO ASA MERGER INQUIRY

STATEMENT OF POSSIBLE REMEDIES

The Competition Commission (CC) has sent remedies letters, on a purely hypothetical basis, to the main parties in its inquiry into the proposed Nutreco BV/Norsk Hydro ASA merger.

The CC has as yet reached no conclusions on any matter, in particular as to whether the proposed acquisition by Marine Harvest (Scotland) Ltd (MH), a subsidiary of Nutreco Holding BV (Nutreco), of Hydro Seafood GSP Ltd (GSP) from Norsk Hydro ASA (Norsk Hydro) might be expected to operate against the public interest. However, were the CC to reach any adverse finding on the acquisition, it would wish to make appropriate recommendations for remedies to the Secretary of State. This statement of hypothetical remedies is being made public to inform all interested persons, should they wish to comment or to raise further points with the CC within the next week.

As foreshadowed in the Issues Statement, published on 5 September 2000, four possible types of recommendation are being raised with the parties:

not allowing the merger to proceed;
structural remedies;
price controls;
other behavioural undertakings.

These recommendations would be designed to address one or more of the matters set out in the Issues Statement, in particular any adverse effects on competition in the smolt, salmon farming or salmon feed markets.

Not allowing the merger to proceed

What would be the impact on competition in the markets for smolts, salmon farming and salmon feed if the merger were not allowed to proceed.

Structural remedies

Whether the whole businesses of either MH or GSP should be divested.
Whether either or both of GSP and MH should be required to divest (a) a percentage of their production capacity; or (b) specified production sites licensed to them; or (c) specified areas where they undertake salmon farming; such divestment to take place over a period to be specified.
Whether Nutreco should be required to divest one or more of its feed plants located in the UK.

Price and other controls

Whether, in order to address any possible adverse effects on competition in the sale of gutted salmon, measures should be put in place to prevent price discrimination by the merged company. For example, whether it should be a requirement that prices charged by the merged company to any single customer on spot sales or forward contracts should not exceed by more than a specified percentage the average price on spot sales or forward contracts to all customers.
Whether, in order to address the issue of possible adverse effects on competition in the sale of salmon feed, the merged company should undertake to adhere to published price lists on feed. Whether such prices should apply to all customers, including MH and GSP.
Whether maximum market share thresholds for the merged company should be set in the smolt, salmon farming or salmon feed markets. Whether the merged company should, for a specified period, provide information to the DGFT on the market share of the merged company in the smolt, salmon farming or salmon feed markets.
Whether undertakings should be given to the Secretary of State by the merged company to limit the annual amount of salmon production that it sub-contracts to independent farmers. Such limitation might be expressed either as an absolute amount of production capacity that could be sub-contracted, or as a specified proportion of the merged company’s total salmon production in the UK.

Other behavioural undertakings

Whether undertakings should be given to the Secretary of State by the merged company either not to make, or to refrain from making, the provision of any products or services in connection with the production of farmed salmon conditional upon the acceptance of other products or services: for example, making the supply of smolts conditional upon the supply of feed, or the supply of feed conditional upon the use of particular veterinary medicines or treatments.
Whether undertakings should be given to the Secretary of State by the merged company to purchase a specified proportion of its annual feed requirements from feed producers other than Nutreco and its subsidiaries.
Whether undertakings should be given to the Secretary of State by the merged company:

to purchase a specified proportion of its annual smolt requirements from independent smolt suppliers; or
to restrict to certain specified quantities its sale of smolts to third parties.

This press notice is also available on the Competition Commission web site: www.competition-commission.org.uk/50-00.htm or from the Joint Reference Secretary (Nutreco/Hydro Seafood Inquiry), Room 338, New Court, 48 Carey Street, London WC2A 2JT.

Notes to Editors

The Nutreco/Hydro Seafood reference was made by the Secretary of State for Trade and Industry, under Section 64(8) of the Fair Trading Act 1973, on 17 July 2000 (see DTI press release P/2000/495). No conclusions will be reached about whether any matters may be expected to operate against the public interest until the Commission submits its report to the Secretary of State for Trade and Industry on 16 November 2000.
The Issues Statement was set out in Competition Commission News Release 45/00, dated 5 September 2000.
The inquiry is being chaired by Dr Gill Owen, one of the Commission’s members. The other members are Graham Hadley and Judith Hanratty.
Further information can be obtained from the Competition Commission website at www.competition-commission.org.uk/ref.htm
Press enquiries should be directed to:
Francis Royle, Press Officer Tel: 020 7271 0242