Stonegate must be sold, says CC

The Competition Commission has ruled that Noble Foods must sell off Stonegate in order to maintain competition in the UK shell egg market.

Noble had been formed by the merger of Deans Foods and Stonegate in June last year but following an enquiry which has taken nearly seven months to complete, the CC has formally concluded that the merger would reduce competition in markets for fresh eggs leading to higher prices for retailers. The enquiry team has also ruled that the formation of Noble would lead to a substantial lessening of competition (SLC) in the procurement of eggs from producers.

In a joint statement Deans and Stonegate says they are "disappointed" that the CC has currently concluded in favour of a divestment policy. The two companies say that there is "conclusive industry evidence that competitive activity has continued to thrive and indeed flourish since the original referral was announced".

Michael Kent, chief executive of Deans Foods, said: "We remain as committed as ever to the full strategic merger and integration of the two businesses. Unfortunately we have to accept today's decision but will be considering the ramifications with a view to further robust action given our dedication towards our businesses, customers, products and people. Our ultimate commitment is to continue to provide innovative quality leadership in all areas of the supply and production of eggs."

Noble has six months to find a buyer for Stonegate – valued in excess of £30 million – after which time the CC says that if a buyer cannot be found then it will implement a behavioural remedy which would allow all producers supplying Noble to give six weeks notice to terminate their contracts in order to supply other packers.