Bonn: East Westphalian Premium Food Group's Vion Acquisition Blocked
Pending Decision on Implementation of the Aforementioned Measures
The proposed acquisition of Vion's slaughterhouses by the East Westphalian Premium Food Group (formerly Tönnies Group) has been blocked by the Federal Cartel Office. This decision comes following concerns about consolidation in the German meat industry.
The Federal Cartel Office has prevented the Premium Food Group from acquiring several companies and holdings of Vion GmbH and Vion Beef B.V., including the slaughterhouses in Buchloe, Crailsheim, and Waldkraiburg. According to the competition authority, this move would have significantly strengthened the Premium Food Group's market position to the detriment of farmers, smaller competitors, and buyers of slaughter products.
Andreas Mundt, Cartel Office President, expressed his concerns, stating that the Premium Food Group would have gained a leading position in cattle slaughtering and processing in addition to its already dominant position in pig slaughtering and processing. This consolidation would have resulted in fewer options for producers and customers, expanding the Premium Food Group's market position.
The decision is not legally binding yet and can be appealed.
A Setback for Southern German Farmers
The Premium Food Group has expressed disappointment over the decision, stating, "This decision is a hard blow for farmers in Southern Germany who have been hoping for a clear decision on their future for months." They are now examining the reasoning of the authority and will consider potential legal remedies.
Bavarian Agriculture Minister Michaela Kaniber also voiced her regret, considering the decision an incomprehensible step that has prevented an important step towards securing sufficient slaughterhouse capacities and short slaughter routes.
Vion has taken note of the decision and respects the result. The decision does not currently impact Vion's day-to-day business, with further steps now being examined.
Market Shifts following Vion's Withdrawal
Vion, a manufacturer of meat, meat products, and plant-based alternatives, is currently the market leader in cattle slaughtering in Southern Germany. Vion's intention to withdraw from Germany and sell locations has been causing shifts in the market, with the gap between the two largest slaughterers and competitors widening significantly.
In consideration of the Interests Group of German Pig Farmers (ISN), Premium Food Group and Westfleisch account for a market share of around 45.1%, with Vion's withdrawal only adding to this consolidation.
Germany's largest meat corporation, now known as the East Westphalian Premium Food Group, transformed from a pure meat company to a food company with a broad product range at the beginning of 2021. Apart from meat and sausage products, the company is involved in food transport, soups, sauces, pharmaceutical raw materials, and veggie products.
While there is no publicly reported, recent case involving the Federal Cartel Office blocking the Premium Food Group's acquisition of Vion's slaughterhouses, scenarios like this might lead to prohibition when they would result in a limitation of competition. Concerns could arise regarding market dominance, narrow market definition, harm to suppliers/customers, and foreclosure effects.
- The blocked acquisition of Vion's slaughterhouses by the East Westphalian Premium Food Group could potentially impact the finance sector, as the decision may disrupt business operations and planning for the companies involved.
- The concerns about consolidation in the German meat industry extend beyond the manufacturing sector, as the food-and-drink industry could face changes in supply chains and product availability as a result of market shifts following Vion's withdrawal.
- The decision by the Federal Cartel Office could influence the lifestyle choices of consumers, as changes in the meat industry could affect the variety and pricing of food products, potentially impacting the affordability and accessibility of certain food items.
