Two former competitors in the ostrich market will merge to form one company.
The Competition Tribunal has approved the merger between Klein Karoo International in Oudtshoorn and Mosstrich in Mossel Bay, subject to certain conditions, including no retrenchments within the first three years.
Designated Managing Director of the new company, Cape Karoo International, Dr Francois de Wet, says their aim is to create more employment.
He says the industry has suffered over the last few years due to an ongoing drought and Avian influenza, which has hampered meat exports.
“We’ll probably not see big moves in the next six to 12 months, but for the long term, it’s for the best for the ostrich industry, not only in the Western Cape, but also in the other provinces. We know that in the long term we can really make a difference also on the farms and for the ostrich producers in all the different provinces.”
Monopoly in industry
In December 2018, the Commission prohibited this intermediate merger, arguing 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.
It did not, however, identify any competition concerns relating to ostrich leather as ostrich leather was found to be substitutable with other exotic skins.
The Commission also claimed that the transaction would enable the merged entity to control the entire value chain and eliminate competition.
The Commission was concerned that the merger would essentially effect a permanent structural change to the ostrich industry, which posed significant competition concerns.
Although the merging parties proposed remedies, the Commission was of the view that these remedies were inadequate to address its concerns.