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August 20, 2019

South African ostrich meat firms Klein Karoo and Mosstrich allowed to merge

A planned merger between two South African ostrich meat companies - Klein Karoo International and Mosstrich - has been ruled on by the country's competition watchdog.

By Leonie Barrie

A planned merger between two South African ostrich meat companies – Klein Karoo International and Mosstrich – has been green-lighted by the country’s competition watchdog.

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But the South African Competition Tribunal has placed several conditions on the deal.

Its ruling – seen by just-food – states that the new merged entity must make a certain percentage of its ostrich steaks and fillets, as well as ostrich trimmings, available for sale in South Africa each financial year. The percentages relating to the volume condition will remain confidential and the condition will remain in place indefinitely.

This would appear to be a precaution against the bulk of the meat leaving the country for export purposes, as it does at present.

The newly merged entity will also have to offer access to its abattoirs and tanneries when it has excess capacity to any party requiring access on terms that are “fair, reasonable and non-discriminatory in respect of pricing, quality and timeliness”.

The businesses have abattoir facilities in Oudtshoorn, Mossel Bay, De Aar and Graaff-Reinet.

Other conditions include that the current agreements between Mosstrich and two of its customers, Buffelskom Boerdery and Ostriland, will be amended to remain in place indefinitely, subject to a 24-month notice period in which either party may cancel the agreement, and that no employees will be retrenched as a result of the merger for a period of three years from the date it is implemented.

Nor will Buffelskom and Ostriland be restricted from competing with the merged entity for the duration of the agreement, during the notice period or thereafter.

And Ostriland will not be restricted from constructing an ostrich abattoir (if it so wishes) nor will it be restricted from processing, marketing or selling ostrich meat.  

The proposed merger had been blocked by the Tribunal in December on the grounds that it would create a near monopoly in the ostrich industry and lead to a significant lessening of competition in the market for ostrich meat and feathers.

But the businesses challenged this decision in January, arguing that the merger is necessary to stabilise the ostrich industry which is suffering significant decline due to different factors which contribute to farmers being unable to realise sufficient returns on their ostriches. These factors include, among others, droughts and the recurrence of Avian Influenza resulting in export bans on raw meat.

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