Cornering the salmon market
Norway's Pan Fish ASA has offered to buy Scotland's Marine Harvest MV. The acquisition, now priced at around $1.6 billion, would create the world's largest raiser of farmed Atlantic salmon. The merged company would control around 50% of Scotland's salmon production (some are claiming 65% or more) and about 20% of the word's production of farmed salmon.
Antitrust concerns have been raised in the UK, as the domination of the salmon market would be dramatic. The usual fears of price fixing have been raised. According to a Financial Times article ("Salmon farming merger move referred to regulator", 5/5/06):
Atle Eide, chief executive of Pan Fish, said the OFT's referral was not unexpected, but he did not recognise the problem concerning prices it had raised. "In the EU, total consumption of seafood is about 16m tones annually, of which farmed salmon is only about 700,000 tonnes - less than 5 per cent. So if consumers were to find salmon too expensive, they have plenty of alternatives.
In other words, as with many antitrust actions, it’s a matter of framing the argument. Is there a salmon industry or a fresh fish industry? By adjusting the frame, Pan Fish's move looks a lot less threatening. That argument has been bought by Norwegian, US, and other antitrust regulators, but the UK may put up an obstacle. The biggest underlying issue is the possible loss of rural jobs in Scotland after the consolidation.
Pan Fish is a fast growing company. It i s both a supplier of fish and a vendor of fish, both farmed and wild, to retailers.This year it acquired control of Norwegian rival Fjord Seafood, which has operations around the world. It is notable that the principal owner of Pan Fish, Johm Fredriksen, is also the owner of the world's top independent oil tanker group Frontline. The desire to dominate an industry is a strategy that has paid off for him.
