South African ostrich meat merger approved

By Aidan Fortune contact

- Last updated on GMT

Two South African ostrich meat companies are set to merge
Two South African ostrich meat companies are set to merge
The South African Competition Tribunal has conditionally approved a merger between the country’s largest ostrich processing companies, Klein Karoo International and Mosstrich, subject to several conditions.

Klein Karoo International and Mosstrich supply ostrich slaughter and ostrich feather-related services to ostrich farmers, as well as tannery services for ostrich skins. The markets for the supply of ostrich feathers, meat and skins are largely export orientated.

The businesses have abattoir facilities in Oudtshoorn, Mossel Bay, De Aar and Graaff-Reinet and tannery facilities in Mossel Bay and Oudtshoorn.

The conditions set out by the Tribunal mean the new merged entity must make a certain percentage of its ostrich steaks and fillets, as well as ostrich trimmings, available for sale in South Africa each financial year. The percentages relating to the volume condition will remain confidential and this condition will remain in place indefinitely.

It will also have to offer access to its abattoirs and tanneries, when it has excess capacity, to any party requiring access on terms that are “fair, reasonable and non-discriminatory in respect of pricing, quality and timeliness”​.

Other conditions include that the current agreements between Mosstrich and two of its customers, Buffelskom Boerdery and Ostriland, will be amended to remain in place indefinitely, subject to a 24-month notice period in which either party may cancel the agreement, and that no employees will be retrenched as a result of the merger for a period of three years from the date it is implemented.

The proposed merger had been blocked by the Tribunal in 20 December 2018 on the grounds that it would create a near monopoly in the ostrich industry and lead to a significant lessening of competition in the market for ostrich meat and feathers.

Both businesses challenged this decision, arguing that the merger is necessary to stabalise the ostrich industry which is suffering significant decline due to different factors which contribute to farmers being unable to realise sufficient returns on their ostriches. Factors cited included droughts and the recurrence of Avian Influenza resulting in export bans on raw meat in an export driven market.

The Tribunal acquiesced following the agreement of the conditions set out above.

Related topics: Financial, Exotic, South Africa

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