Ostrich processing giants allowed to merge
CAPE TOWN – The Competition Tribunal has approved the merger between the biggest local ostrich processing companies, Klein Karoo International (KKI) and Mosstrich, as long as they make enough feathers and meat available on the local market.
The Tribunal ruling late last week follows a December 2018 ruling by the Competition Commission to prohibit the merger.
The commission had argued 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.
In January, KKI and Mosstrich filed an application in the Tribunal challenging the commission decision.
KKI and Mosstrich supply ostrich slaughter and ostrich feather-related services to ostrich farmers, and tannery services for ostrich skins. Ostrich feathers and meat are largely exported.
The conditions imposed by the tribunal late last week relate to ensuring the availability in South Africa of ostrich feathers to producers of various feather-related products.
Ostrich steaks, fillet and trimmings must be available to wholesalers and retailers of ostrich meat products, the tribunal said.
The companies have abattoir facilities in Oudtshoorn, Mossel Bay, De Aar and Graaff-Reinet and tannery facilities in Mossel Bay and Oudtshoorn.
The merged company will also be obliged to offer at least 40 percent of its slaughter line ostrich feathers on tender, in each financial year, the tribunal said,
In addition, third parties, such as ostrich farmers who bring their ostriches to the company for slaughter, must be allowed to retain their feathers if they wish to, on reasonable terms, the tribunal said.
The merged company would not be allowed to retrench staff for three years after the merger, the tribunal ordered.
At the tribunal hearing, the companies argued that the merger was necessary to stabilise the industry because it is suffering significant decline due to farmers not being able to realise sufficient returns on their ostriches. This was due to factors such as drought and the recurrence of avian influenza resulting in export bans on raw meat.