A merger between Danish meat co-operatives Danish Crown and Tican could hit local competition, the European Commission has warned.
Brussels has been looking into the impact the deal could have in Denmark and three other markets – Poland, Sweden and the UK.
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The Commission said the combination would "not significantly impede effective competition in the European Economic Area (EEA) outside Denmark" given the companies' low market shares.
However, the transaction has been referred back to the Danish competition watchdog. The Danish Competition and Consumer Authority had asked Brussels to refer the deal back to it after putting forward "various competition concerns in certain Danish markets related to pig meat", the Commission said.
"The DCCA further explained that it would be well placed to review the competition effects in Denmark of the proposed transaction given, for instance, its proximity to and specialist knowledge of the markets and experience in handling previous cases related to the same markets.
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"The evidence gathered by the Commission confirmed that the merger threatens to affect significantly competition in Denmark, where Danish Crown and Tican are currently the two largest competitors. The Commission therefore decided to partially refer the merger to the Danish competition authority, which will deal with the case under national law."
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By GlobalDataDanish Crown and Tican set out their plans to merge in February. The move followed a period in which Tican had been seeking a financial partner.
Announcing the deal, Tican chairman Jens Jørgen Henriksen conceded concerns over competition issues meant a tie-up with Danish Crown was not initially considered when the company kicked off its ownership review more than a year ago. "We had not expected that Danish Crown would be a possible partner, but this merger is without doubt the preferred option for Tican members," he said at the time.
However, Danish Crown stressed it had consulted with Danish and international competition experts. "We got a clear message," Danish Crown chairman Erik Bredhold said.
Speaking to just-food today, a spokesperson for Danish Crown said the Commission's announcement was "a step forward" in the process.
"We certainly wouldn't have started this merger if we didn't believe in it," he said. "We see this as a step forward now that the Danish authority will look into it and we look forward to having dialogue with them."
Asked if Danish Crown would be prepared to sell assets to get the deal through, the spokesperson replied: "It would never be a point we would discuss with the media."
