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16 October 2000

NUTRECO HOLDING NV/HYDRO SEAFOOD GSP LTD MERGER INQUIRY

FURTHER ISSUES

The Competition Commission has sent letters to the main parties in its inquiry into the proposed Nutreco BV/Norsk Hydro ASA merger. The Commission has developed its thinking on some existing issues that all relate closely to matters set out in the issues statement, dated 5 September 2000.

Competition in feed supply

Whether following the merger Nutreco would decide to bring the greater part of its feed requirements in house, giving it a large and assured customer base in the UK. Whether this assured customer base would give it preferential access to capital and greater ease in investing and expanding. Whether this, and/or a larger volume of production from the assured customer base, would in turn give it significant economies of scale relative to its competitors, in particular through its ability to spread its overheads over greater volumes of feed. Whether as a result EWOS and/or BioMar would be left with too narrow a customer base to enable them to recover their overheads, causing them to become weakened as competitors or even to exit the UK market.

Whether Trouw could adopt the predatory tactic of lowering the price of feed, thereby leading to the weakening of EWOS and/or BioMar, possibly resulting in the exiting of one or other from the market. Whether competition in the supply of feed would thereby be reduced.

Salmon farming

In salmon farming, whether the enhanced market share of Nutreco following the merger would make it increasingly difficult for other salmon farmers to compete. Whether under those circumstances Nutreco would provide an exit opportunity for independent salmon farmers, either by purchasing their businesses or by taking them on as sub-contractors. Whether this would further enhance Nutreco’s market power in salmon farming in the UK.

Whether the use of contract farming by Nutreco represents a further means by which Nutreco enhances its market power and its market share. Whether the use of contract farming thereby further reduces the competition within salmon farming in the UK.

Supply of smolts

Whether the merged company’s increased control of the supply of smolts would enable it to gain more control over the farmed salmon chain. For example, whether it would seek to supply other salmon farmers at lower prices than could be offered by independent smolt producers, thereby weakening other smolt suppliers, or to bundle smolt with feed supply or primary processing services, thereby weakening other feed suppliers or processors. Whether as a result independent smolt producers would exit the market. Whether the quality of the UK salmon stock would be threatened because a high percentage of smolt production was under the control of one company.

Notes to Editors