Poultry farmers could end up paying higher feed prices if the joint venture between ForFarmers and 2 Agriculture goes ahead, the competition watchdog has said.
The Competition and Markets Authority (CMA) launched an investigation last month into the anticipated joint venture between the two firms.
Netherlands-based ForFarmers and 2 Agriculture, owned by UK company Boparan, both manufacture and supply chicken and other types of poultry feed in the UK.
The companies are planning to combine their animal feed milling operations in a joint venture. Between them, the firms operate 19 mills across the UK.
Following its initial investigation, the CMA has found that the deal raises competition concerns in four local areas across East Anglia, north-western England and North Wales.
The UK's competition watchdog said the deal could lead to higher prices for poultry feed, lower quality feed or worse quality of service.
While both businesses currently compete for customers within each of these local areas, the CMA said it was concerned that the combined business would not face sufficient competition after the merger.
The CMA also said the joint venture could unfairly favour Boparan’s poultry farming and processing businesses, resulting in less choice for smaller farmers and processors, who might rely on the two firms for their feed.
During its investigation, the watchdog received complaints from customers and other market participants in relation to the impact the merger could have on choice of feed suppliers and poultry feed prices.
Sorcha O’Carroll, senior director of mergers at the CMA, said: "Feed is the biggest expense faced by farmers when rearing chicken, the UK’s favourite meat.
"With food prices already increasing and the wider cost of living crisis, it is vital that we don’t allow a reduction in competition between poultry feed suppliers, which could make this situation worse - both for farmers and shoppers."
The CMA found that the merger gave rise to competition concerns in the local areas around four of the feed mills operated by the combined businesses, namely in Burston, Bury, Llay and Preston.
The combined businesses would account for 50 to 60% of the supply of meat poultry feed to third parties in three of these local areas - Burston, Bury and Llay - and 40 to 50% in the fourth local area, Preston.