The European Commission on Monday cleared Marine Harvest’s acquisition of Polish processor and salmon farmer Morpol, after Marine Harvest agreed to divest farming activities in Scotland.
“The commission had concerns that the transaction, as originally notified, would have significantly reduced competition in the market for farming and primary processing of Scottish salmon. The commitments offered by the merging companies addresses these concerns,” the EC said in a statement.
Marine Harvest said the transaction complements existing production in Scotland with an increased production capacity of 6,000 metric tons (MT) and Norway with an increased capacity of 7,000 MT. The transaction also opens up new geographical areas for Marine Harvest.
Marine Harvest agreed to sell its 11,000 MT farming capacity in Shetland and 7,000 MT in Orkney. The company also agreed to divest freshwater capacity and primary processing plants in the same areas.
“The commission's investigation showed that there is an important group of customers with a clear preference for salmon farmed in Scotland as compared to salmon farmed in other countries, in particular Norway. As a result, the possibility for customers to buy salmon from other origins would not have been sufficient to defeat a possible price increase of Scottish salmon,” the commission wrote. “Nor would alternative suppliers in Scotland have been able to offset such a price increase given the lack of sufficient spare capacity. Finally, high regulatory barriers make entry in the market for Scottish salmon unlikely in the foreseeable future and in any event insufficient to remove the identified competition problem.”
With the approval of the transaction, Marine Harvest can exercise normal shareholder rights relating to its 87.1% ownership in Morpol. Morpol will remain listed on the Oslo Stock Exchange for the time under the ticker code MORPOL.
After the transaction, Marine Harvest will have 10,200 employees and the production estimate for 2014 will exceed 400,000 MT.
“The purchase of Morpol is in line with Marine Harvest's strategy of forming an innovative and integrated protein group. Our established position within salmon farming will be further complemented and our presence within value added processing activities will take a giant leap,” said Ole-Eirik Leroy. “The board believes that this will provide significant operational benefits, as well as boosting and stabilizing the long term earnings power of the group.”
