Seanad Éireann debate -
Wednesday, 23 May 1990

Vol. 125 No. 1

Adjournment Matter. - Donegal Meat Factory Closure.

Mr. McGowan

I welcome the Minister to the Seanad and express my sincere appreciation that he came in to respond to this motion, because I consider it a very important one. I am glad to have the Minister here because he has a contribution to make. A statement from him to be very valuable at this time. I appreciate it very much.

I did not lightly put down the motion on the Adjournment. I realise that to use this opportunity to raise this matter as a publicity stunt or in the sense of flying a kite would be far from productive when dealing with a matter so delicate and so serious. In fact, it would be a disservice to the people whom I hope to assist. My motion refers to the serious situation caused by the closure of the meat factory at Carrigans, County Donegal and it asks the Minister for Industry and Commerce to try to resolve the dispute and have the factory working again. Farmers in County Donegal are completely in the dark and they are unaware of the situation. Statements have been made, the IFA have had meetings and I believe it is necessary to have the position clarified.

I fully understand there is a serious difference of opinion on major issues, many not directly relating to the Carrigans meat factory, between the Minister, his Department and Goodman International and I appreciate that these differences are not the easiest to resolve. There is no simple statement that I or any other person could make that would contribute to removing any obstacles there. It is in that frame of understanding that I approach this motion. However, because I live in County Donegal within four miles of the Carrigans meat factory, I believe it is important for me to raise this matter on the Adjournment to highlight the difficulties and to give the Minister an opportunity to respond.

The way the people who are in the cattle business and the sheep business look at it in County Donegal is that they have a newly equipped factory at Carrigans and the owners, according to the best information available, are Goodman International. It is a very modern factory and Goodman International have a market at a time when cattle and sheep are difficult to sell. These are the bones of the problem that exist in County Donegal at present.

The list of priorities is simple enough. There are many people whose jobs are at stake. There are about 300,000 cattle, 40,000 cows, and 330,000 sheep plus lambs in County Donegal. In 1989 we had 6,580 applications for headage payments and over £4.5 million was paid. Therefore, the cattle and sheep industry is a vital part of the economy of my county.

The Carrigans meat factory is to Donegal what Waterford Glass is to Waterford. That is the magnitude of the concern of the people in Donegal. On 20 April 1989 I wrote to the Minister and had a reply. I also wrote to Goodman International to ask them to assist me. I will quote from the reply I got from Goodman International and I will give the Minister a copy of what I have received also. The letter from Goodman International states:

For your information we signed the contract for the acquisition of the plant on 14 June 1989. Within a few days we injected over £4.5 million into the company to enable all farmers, suppliers, creditors and employees to be paid in full and to clear off a substantial bank debt incurred by the previous owners. Following our acquisition, we spent substantial sums on parts of the plant which were not up to our group's high standards with the objective of having the plant operational for the main killing season in the middle of October 1989.

In fact we had eased the inspection following this work in early September and got full approval. The history of the problem relating to the Merger and Acquisitions Act is as follows:

On 28 June 1989 mergers were notified by the vendors. On 26 July queries were raised by the Department of Industry and Commerce. On 9 August 1989 queries were replied to in detail. On 12 September Department of Industry and Commerce notification without prior warning to the Free Trade Commission. On 19 September 1989, a full submission by our Group to the Fair Trade Commission. On 9 October 1989, report by the Fair Trade Commission to the Minister for Industry and Commerce. On 11 April 1990, ministerial order preventing the factory from opening.

Those are the facts that Goodman International have supplied to me. It is an important issue in County Donegal and it is important that the Minister and his Department are seen to contribute towards resolving the difficulties in their domain.

I will not underestimate those difficulties. I believe the Minister has to look at the situation and how it affects the life of the small farmer in County Donegal. Unfortunately, my county does not have very large milk quotas. We have a large number of small family farms that are depending on rearing a small number of cattle. The average herd is about seven cattle so that gives some idea of the size and the farm income that is affected. I will not talk about the current problems with cattle: I do not think that is an important part of what I hope to do.

I strongly urge the Minister, however major the difficulties between Goodman International and his Department, to examine the Carrigans factory situation in the light of what it is doing to the community that depends on it for a livelihood. My county has a very high number of unemployed. We have ambition, the people there are hard-working and this is a very big issue. I hope the Minister can contribute to a settlement of the dispute. I am delighted he has come in here, that he did not choose to send in a representative. I ask him, if it is humanly possible, to press his Department, or whoever is responsible for the hold-up at this time, to try to resolve the Carrigans situation, to take it out of the general picture. If there is an overall dispute with Goodman International, then I ask the Minister to resolve the dispute and please try to allow Carrigans meat factory to go into operation and relieve the difficult situation we have in County Donegal.

Minister for Industry and Commerce (Mr. O'Malley)

As the House is aware, my action in relation to the Carrigans meat factory in County Donegal arises under my functions under the Mergers, Takeovers and Monopolies (Control) Acts, 1978 and 1987. This legislation sets out to control takeovers and mergers involving any two or more enterprises, at least one of which carries on business in the State, coming under common control and where they exceed certain financial thresholds, as defined in the 1978 Act. Where a merger or takeover is proposed, which falls within the scope of the Act, notification of the proposal to the Minister for Industry and Commerce is obligatory. A merger or takeover cannot be concluded until the Minister has stated that he does not propose to prohibit it, either absolutely or conditionally, or, in the absence of such a statement, until the period of three months has elapsed from the date of notification, or from the date of receipt of such further information as the Minister may require.

The proposal involving the proposed acquisition of the entire issued share capital of DJS Meats Ltd. at Carrigans, County Donegal by Anglo-Irish Beef Processors Ltd. was notified under the Mergers, Takeovers and Monopolies (Control) Acts, 1978 and 1987, on 27 June 1989. Additional information was requested from the parties on 26 July 1989 and while the notifying parties responded on 9 August 1989 it was considered that they failed to fully answer all the questions raised. The additional information requested was eventually received on 17 January 1990. I notice that very pertinent fact was omitted from the letter of 7 May which was sent to Senator McGowan. The three month timescale for my consideration of this proposal and for the proposal involving the proposed acquisition by Anglo-Irish Beef Processors of Master Meat Packers (Bandon) Ltd., expired on 16 April 1990. I referred the proposal involving the proposed acquisition of the DJS Meats Ltd., plant by Anglo-Irish Beef Processors to the Fair Trade Commission on 11 September 1989, my predecessor having referred the earlier proposal in respect of the Master Meats plants and I received the Commission's report on 10 October 1989. Under the Acts I have discretion initially to approve a proposal without further investigation or to refer it for investigation to the Commission, which are obliged to investigate every proposal referred to them and report to the Minister for Industry and Commerce on their investigation. The Commission's report must state their opinion as to whether or not the proposed merger or takeover would operate against the common good in respect of the criteria set out in the Schedule to the Act.

While, as I have indicated, the Commission's report in relation to the DJS Meats Ltd., plant was received on 10 October 1989 I did not wish to consider this proposal in isolation from the general issues concerning Master Meats which were very complex and which had fundamental implications for the future of the beef processing industry. In this regard it was clear to me from the Fair Trade Commission's separate report into the change in control of the Master Meat group that effective control over the group was being exercised by a person with other substantial involvement in the meat trade in Ireland. I considered it undesirable and contrary to the common good for this control of the third largest meat processing group to continue and, therefore, undertook rigorous examination of the legal means, including the powers available to me under the Mergers, Takeovers and Monopolies (Control) Acts 1978 and 1987, by which this undesirable control could be brought to an end.

While this examination was continuing I was, of course, aware of the concerns relating to the closure of the DJS Meats plant in regard to the future prospects for employees at the plant and the difficulties for farmers in the area, as effectively no slaughtering has taken place in the plant since the end of June 1989, although I believe the factory was open for boning and processing for a fairly substantial period of time since then. Indeed, I had two meetings with representatives of the IFA in this regard. However, as I have already indicated, it was necessary for me to complete my examination of the general issues surrounding the Master Meat group before taking my decision in relation to the DJS plant.

On 11 April 1990 in the due exercise of my powers under the Mergers Acts, I made two separate orders prohibiting the proposed acquisitions by Anglo-Irish Beef Processors of the DJS Meats Ltd. Plant and of the Master Meat Packers (Bandon) Ltd. plant. Under the order relating to DJS, this prohibition will cease to have effect if and when the Omagh Master Meats plant has been disposed of as a going concern to interests other than Anglo-Irish Beef Processors or connected parties and if and when there are no anti-competitive agreements or arrangements between Anglo-Irish Beef Processors or connected parties and Master Meat Packers or connected parties. It should not be too difficult to sell that single plant. That is the only condition because I discovered from the IFA that they were under the impression that the disposal of all the Master Meat processor factories was required, but that is not the case.

In making the orders I carefully considered reports of investigations by the Fair Trade Commission and I consulted with the Minister for Agriculture and Food in making my decisions in regard to the proposed acquisitions by Anglo-Irish Beef Processors of the Master Meat Packers (Bandon) Ltd. and DJS Meats. I took advice over a period of several months from the Attorney General in relation to the legal issues which were extremely complex.

Regarding the DJS Meats plant, the Fair Trade Commission concluded — I want to lay some emphasis on this because this whole matter tends to be personalised into some sort of personal row — that the acquisition by Anglo-Irish Beef Processors would not be likely to operate against the common good provided that (1) the Carrigans plant was to be operated as a going concern and (2), that the Omagh plant only was not owned, controlled and operated by AIBP or by connected persons. The Commission's concern, which I fully endorsed, was that if the DJS Meats plant and the Master Meat Packers (Omagh) plant were under common control, this control would be likely to prevent, restrict or distort competition in the purchase of cattle in County Donegal and in areas in the State adjoining that county to such an extent as to operate against the common good. It is therefore, in the clear interests of farmers in County Donegal that this relatively simple condition be insisted upon. They should not confuse their very short-term interests with their medium and long-term interests which, in my view, are infinitely more important.

As required by the Acts, the order sets a deadline of 12 months for the completion of the acquisition by Anglo-Irish Beef Processors of DJS Meats in accordance with the conditions in the order. However, I would like to emphasise that the matter now rests with Anglo-Irish Beef Processors and its connected persons to fulfil the conditions of the order and, accordingly, pave the way for the earliest possible reopening of the DJS plant.

I would like to comment on the second paragraph of the letter that Senator McGowan has just given me where it is stated by the writer, on behalf of Goodman International which is a holding company of Anglo-Irish Beef Processors, that "the reason the plant is not open at this point in time is entirely beyond our control". Of course, that is not so. The takeover can be completed in the morning if the condition that is attached to the prohibition order is complied with. The Fair Trade Commission regard it as desirable, fair and essential that that be done.

I have already commented on the fact that the letter omits the date of reply to the request for particulars which was, of course, a very very long time after the request. "On 11 April a ministerial order preventing the factory reopening" is quoted in the letter. That, of course, is not the case. I made no such order. The factory was open for most of the time after the notification was given. The order I made did not prevent it reopening. It simply requires a condition to be complied with before the transaction can be legally completed.

Senator McGowan described a dispute between me and my Department on the one hand and Goodman International on the other hand as being the cause of this difficulty which I accept exists in Carrigans. That, of course, is not the case. There is not a dispute. Each case is judged on its merits. A separate order was made in regard to this. The conditions are far less onerous than they are in regard to the other proposal and that should be borne in mind.

Each case will continue to be judged on its merits, and could not be judged in any other way. The fact that there may have been difficulties with the same group in relation to other matters that have no connection with this particular factory, which they did not own in any way at the time, or had not sought to acquire at the time, are irrelevant. They were certainly not taken into account and did not in any way influence my judgment, or needless to say the judgment of the Fair Trade Commission, which in this case I simply concurred with.

The Seanad adjourned at 8.40 p.m. until 10.30 a.m. on Thursday, 24 May 1990.