Animal Waste (Report) (Hansard, 3 April 1985)

§ Mr. Fletcher

The report is published today. The commission found that a monopoly situation existed in that about 44 per cent. of animal waste was supplied to the Prosper de Mulder Group. It also found that implementation of the company's pricing policy for purchases of animal waste was against the public interest. This included both prices paid by the company to abattoirs for waste material for rendering and also prices paid to the abattoirs for contracts to operate their gut-rooms, where abdominal material is recovered and sorted. The commission found that in both cases, when faced with loss of supplies, Prosper de Mulder attempted to secure or recover them by a price campaign, aimed mainly at particular competitors, regardless of whether the prices paid or offered would involve it in losses (which might be met through cross-subsidation). The particular effect adverse to the public interest was that this was likely to restrict competition in rendering or in gut-room operation.

The commission found no current cases of such pricing for material for rendering, but drew attention to the fact that any future examples of predatory pricing in this field could be investigated under the Competition Act 1980. Regarding gut-room contracts there was a current problem and the commission therefore recommended that Prosper de Mulder should give an undertaking that it would not offer for or enter into gut-room contracts without having first established a reasonable expectation that the operation of any particular gut-room, taken on its own, would be carried on at a profit. There should be no cross-subsidisation between gut-room business and other parts of the company's business or between any individual gut-room operations.

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The commission also considered allegations that Prosper de Mulder might be refusing to collect an abattoir's low grade material unless it was also offered the high grade material. The commission found no specific cases of this conditional buying and they accepted an assurance from Prosper de Mulder that it never had, nor ever would follow, this practice.

Finally, the commission made two further suggestions for action to maintain competition in the industry. First, it pointed out that further acquisitions of renderers on waste collectors by Prosper de Mulder could be referred for investigation under the merger provisions of the Fair Trading Act, and suggested that this be considered. Secondly, it considered that the tendency of local authorities to seek stricter enforcement of anti-pollution measures might cause problems for existing renderers and possible new entrants to the market. It recognised the need for the public to be protected by such measures and had no wish to suggest any relaxation of steps to enforce them; but it expressed interest in a suggestion made to it that a system of voluntary arbitration might be set up under which a member of the Institute of Environmental Health Officers and a member of the United Kingdom Renderers Associations would visit plants with odour problems and suggest remedies.

I accept the findings of this report. I am asking the Director General of Fair Trading to open discussions with Prosper de Mulder Ltd. with a view to securing an appropriate undertaking regarding gut-room contracts. I am also asking the Director General to seek assurances from the company that it will not pursue a policy of conditional buying and that it will notify the Director General in advance of any proposal to acquire any other rendering business.

I have asked my right hon. Friend the Secretary of State for the Environment to consider the commission's suggestion regarding environmental health controls.