Bundeskartellamt prohibits Tönnies from acquiring slaughterhouse operator Tummel

The Bundeskartellamt has stopped plans by the slaughterhouse operator Tönnies, Rheda-Wiedenbrück, to merge with the company Tummel in Schöppingen. Tönnies holds a dominant position in the procurement of cull sows and distribution of sow meat to meat processors in Germany. The acquisition of a majority share in the slaughterhouse operator Tummel would have further strengthened this dominant position.

Andreas Mundt, President of the Bundeskartellamt, stated: "Due to the fact that Germany is a centre for sausage manufacture, approx. 65% of all sows slaughtered in the EU are boned and sold here. As Germany's leading slaughterer of pigs and sows, the Tönnies Group is dominant in this market. Tönnies already dominates the value-added chain of sow slaughtering and processing in Germany. Its access to Tummel's procurement and slaughter volumes would have further diminished the likelihood of effective competition in this area. We have countered this by prohibiting the merger project."

All along the value-added chain, from the acquisition of animals for slaughtering via slaughtering through to processing and meat distribution, slaughtering pigs and sows are assigned to different product markets. Sows are used for breeding in piglet production and have a slaughter weight of approx.160 kg; slaughtering pigs weigh approx. 95 kg. In contrast to pig meat, sow meat is almost exclusively used for sausage manufacture.

On account of its high market shares (more than 40% of the procurement market), its vertical integration at different market levels and business links with competitors and buyers, Tönnies is an indispensable contract partner in the market. Via the group's principal shareholder, Mr Clemens Tönnies, the company is also associated with Germany's largest sausage manufacturer, the Mühlen Group. An analysis of Tönnies' actual market conduct has also shown that, with its considerable buyer power, the company is able to influence procurement conditions to the detriment of its competitors.

The planned acquisition would have resulted in the disappearance from the market of Tummel, which has up to now been an independent slaughterhouse situated in a geographic area which is favourable for the acquisition of sows. The increase in volumes of around 10-15% would also further expand Tönnies' scope of action. This includes the volumes which Tummel currently slaughters for Westfleisch, Tönnies' second largest competitor on the domestic market, on the basis of a contract slaughter agreement.

As a solution to the competition problems, Tönnies had proposed commitments, in particular to offer contract slaughtering facilities to Westfleisch and other actual or potential competitors. The company was also prepared to temporarily suspend its own sow slaughtering activities at Tummel's slaughtering plant. However, the Bundeskartellamt's investigation showed that the commitments offered would not have dispelled the competition concerns and would have necessitated the continued control of Tönnies’ conduct by the Bundeskartellamt, which is inadmissible under competition law. The authority's assessment was largely confirmed by the market participants consulted.

The decision is not yet final. The companies have a month to appeal the decision to the Düsseldorf Higher Regional Court.