Egg supplier Noble Foods is confident it will avoid being broken up, despite a recent ruling by the Competition Commission.

Noble's management says there is little prospect of a successful sale of Stonegate - the smaller partner in the merger with Deans - because none of its competitors have the funds or the interest. In its last full-year results on 2004/05, Stonegate posted profits of £2.4m on turnover of £103m.

"We genuinely believe that a buyer for Stonegate will not be found and that we will gain full approval for the merger in six to nine months time," said chief executive Michael Kent in a letter to egg producers.

He also said divestment could actually raise egg prices for retailers in the long term because two companies would have higher overheads than one.

The Commission's ruling last week said Noble could only restore competition in the shell and liquid egg markets by selling off Stonegate. At present, Noble controls more than 60% of the shell egg market to retailers and 50% of liquid egg supplies.

"Stonegate and Deans were viable profitable businesses prior to merger - so there's no reason to believe that Stonegate couldn't be sold as a viable business," said a spokesman for the Commission. He pointed out that egg prices were at their highest for 10 years.

But if the sale is not achieved this year, the Commission said it would enforce a behavioural remedy instead. Noble would have to put its third-party egg suppliers on contracts with six weeks' notice, to make it easier for them to switch to another packer. That would make it possible for smaller packers to win retail contracts and start recruiting producers.

"A behavioural remedy would not be as comprehensive a solution as divestiture of Stonegate," said the Commission's final report. "But it would impose a pricing restraint by the threat of producers switching."

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