Salmon firm takeover blocked

Hydro Seafood is the world's biggest salmon farming firm

The Department of Trade and Industry has blocked a merger of two of the fish farming industry's biggest companies in Scotland.

The DTI said Nutreco's proposed acquisition of Hydro Seafood would lead to more expensive salmon and went against the public interest.

Nutreco is the largest supplier of salmon feed in Britain, and Hydro Seafood is the biggest salmon farming company in the world.

Their merger has now gone ahead in other countries creating the world leader in farmed salmon.

The firm is a major producer in Scotland

But the Competition and Consumer Affairs Minister, Dr Kim Howells, said the merged company would have too much power in Scotland, manipulating feed prices and reducing competition.

This, he said would lead to more expensive salmon for the consumer.

In order to protect the Scottish salmon industry and the public interest, he said the only option was to prohibit the deal.

Dr Howells accepted the conclusions of a Competition Commission report and the advice of the Director General of Fair Trading (DGFT).

He said: "I agree with the conclusions of the CC, endorsed by the DGFT, that the merger of Nutreco and GSP would be against the public interest.

Strong position

"The CC found that the merger would reduce competition in the market for salmon feed and lead to increased prices.

"Although the merger would not increase Nutreco's share of feed supply, the CC concluded that its already strong position in the market, coupled with an increased share of the customer base through the acquisition of GSP, would enhance its position in the market at the expense of competitors and customers.

"Nutreco's position in the market would enable it to raise prices to salmon producers, and as salmon feed is a major component of the costs of salmon production such price increases could lead to increased prices for end consumers.

"In particular, the CC concluded that those customers and end consumers who specifically wanted Scottish salmon could face higher prices."

Last year the world's second-biggest salmon farming and processing firm, Marine Harvest McConnell, was taken over by Nutreco in a £32.7m deal.