Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Canada Competition Bureau will not challenge combination of animal by-product processors, (Oct 28, 2013)
Organizations Mentioned:Darling International Inc. | Darling International, Inc. | Maple Leaf Foods Inc. | Maple Leaf Foods, Inc.
By Tobias J. Gillett, J.D., LL.M.
The Canada Competition Bureau today issued a No Action Letter to Darling International Inc. and Maple Leaf Foods Inc., informing the animal byproduct renderers that it does not intend to challenge Darling’s (Can.) $645 million acquisition of Maple Leaf’s Rothsay Rendering and Bio Diesel Business at this time, the agency has announced.
The two businesses collect inedible animal by-products from slaughterhouses, meat processors, butchers, and other sources, and grease, particularly used cooking oil from restaurants. The processed animal meals and fats are used in animal feed and pet foods. Tallow (rendered beef fat) and grease are used in biodiesel production, as well as in soaps, lubricants, and cosmetics.
Darling, the largest non-integrated renderer in the United States, has 65 processing facilities in the United States, but none in Canada. Rothsay, the largest Canadian renderer, has six Canadian facilities—three in Ontario, one in Manitoba, one in Nova Scotia, and one in Montreal.
The Bureau considered two relevant input product markets—the collection of animal by-products and the collection of grease—and three relevant output product markets—animal meals and fats used in animal feed, animal meals and fats used in pet food (typically higher quality chicken meals and fats than those used in animal feed), and tallow and grease. The geographic scope of the input markets was approximately 320-400 kilometers around Rothsay’s rendering plants, while the geographic scope of the output markets was regional. Only Rothsay’s three Ontario facilities and Darling’s Michigan facilities could potentially compete with each other.
Although the Bureau concluded that barriers to entry to the markets from required regulatory and environmental approvals and declining animal raising and processing volumes in Ontario were moderately high, the Bureau determined that Darling was not an effective competitor in any of the relevant markets. Therefore, the Bureau found that the proposed transaction was not likely to lead to a substantial lessening or prevention of competition in any market.
Companies: Darling International Inc.; Maple Leaf Foods Inc.
News: Antitrust