The European Commission approved the proposed merger in Poland, Sweden and the United Kingdom after its investigation found no threat to effect competition outside Denmark. Tican and Danish Crown generate most of their revenue outside Denmark and a significant part outside the European Union. But in Denmark the situation is different because the companies represent the lion’s share of pork production.
“We have declared our willingness to undertake a large number of commitments to the Danish Competition Authority, and even though we have consulted with the authority on what it would take for the merger to go through, the commitments that we have been ready to undertake have not satisfied the authority’s requirements,”Kjeld Johannesen, president and Group CEO of Danish Crown, said in a statement.
Tican owns processing companies in Denmark, the United Kingdom and Poland. Danish Crown is Europe’s leading processed-meats business via its DC Foods division.
In March, members of the Danish Crown and Tican co-ops approved the merger. Pork producers in Denmark have been challenged by food bans imposed by Russia and declining numbers of slaughter-ready hogs. To persuade the competition authority, Danish Crown agreed to divest production facilities and sell volumes of Danish raw materials in excess of Tican’s and Danish Crown’s combined sales in Denmark.
“It has been clear from the outset that a merger between the two companies would be driven to a large extent by a wish to secure the supply of slaughter animals in Denmark — and to a lesser extent by our business plans,” said Erik Bredholt, chairman of Danish Crown. “However, the costs should, of course, not exceed the potential synergies identified during our consideration of the possible merger.”
Danish Crown said meat imports account for more than 20 percent of total sales of meat consumed in Denmark. Johannesen said he found it difficult to understand how scuttling the proposed Danish Crown-Tican merger would ensure greater market competition.
“It is, of course, a great shame, and we have to admit that we were surprised by the very national perspective adopted by the Danish Competition Authority in its review, given that the merger would be one of two export businesses,” Johannesen said. “It’s hard to see how a European single market can develop if all the national competition authorities maintain a local perspective.”