A case study on why data matter for effective merger reviews: ADPL and HMH Kuku

4 December 2025 by Arthur Mahuma, Chilufya Sampa and Natalie Mouyal

Ineffective merger control has led to a handful of companies dominating the agriculture and food markets in Africa. The result: consumers pay inflated food prices; farmers are squeezed by the high cost for their inputs and small businesses are deterred from offering new services. However, effective implementation of competition law and policy using merger reviews offer competition authorities a tool to limit market concentration. This was the case in a recent review by the COMESA Competition Commission (CCC) in the merger between African Poultry Development Limited (APDL) and HMH Kuku Limited in the poultry market. 

This merger review should be applauded for its in-depth review and understanding of the extensive network of relationships and cross-ownership between poultry companies throughout the region and across the value-chain. As a result of this understanding and following its review, the CCC imposed a number of conditions on its approval. However, this understanding has only been possible due to extensive research, highlighting the importance of ongoing market surveillance for effective merger reviews. 

How are poultry farmers harmed by concentration? 

The commercial poultry sector is growing in Africa, with an anticipated 4% growth according to research from Rabobank. Poultry meat and eggs are easily accessible proteins, and demand has been relatively strong. Because of the sectors reliance on maize and soya as inputs in the production of chicken feed, it is well integrated into regional commodity markets and offers multiple opportunities for employment growth.  

The poultry market is highly specialized and the costs for key inputs (day-old chicks and chicken feed) are inelastic (see Box 1). However, the market for day-old chicks is limited to a few breeders: at the global level two multinational firms account for more than 90% of global supply of breeding stock while in Africa, five main multinational companies own the rights for the leading breeds across the region. Similarly, farmers have limited choice for chicken feed given that the ingredients vary depending on the growth stage, physical needs and output of the chickens raised. As companies increasingly control multiple segments within the value chain, such as feed mills and abattoirs, farmers become a captive market. 

Who wants to merge? 

An integrated poultry company with a dominant regional footprint, Africa Poultry Development Limited (APDL) has subsidiaries in Kenya (Kenchic), Zambia (Hybrid Poultry Farms), Tanzania (Interchick and Tanbreed) and Uganda (Kenchic Uganda) and a minority stake in Aviagen East Africa. It operates in the sale of day-old chicks, poultry feed production, and the supply of processed chickens.  

A national company based in Uganda, HMH Kuku is active in the production of poultry feed and the supply of processed chickens. Co-owned by Hudani Manji Holdings and RCL Foods (South Africa), it has subsidiaries in Kenya and Rwanda (HMH Rainbow). 

Box 1. Key features of the poultry market 

The poultry market supplies eggs and meat to consumers. However, before reaching the consumer’s plate, these products begin in a hatchery where eggs are incubated before hatching into day-old chicks, which are then sold to farmers to produce eggs or meat, then processed and sold on the retail market. It is a highly specialized market with breeders, facilities and feed components targeting the type of chickens being raised. 

General chicken types 

  • Broilers – chickens raised for meat production. These chickens are valued for their ability to grow fast and gain weight rapidly from efficient feed intake.  

  • Layers – chickens raised for their egg production. These chickens need to have a high egg laying capacity and a long egg producing lifespan. 

  • Breeders - grandparent and parent chickens with favorable genetic traits used to produce day-old chicks for the layer and broiler markets. They are specialized birds not used for meat or egg production but rather for their genetic traits that are beneficial for fast growth (broilers) or egg laying capacity (layers). 

Market segments 

  • Breeding – this consists of the development and selling of genetic varieties depending on the characteristics required. Breeding consistes of the supplying day-old chicks for grandparent and parent stocks. These chicks are then sold to farmers for their production of meat or eggs 

  • Production and processing – this consists of raising chickens either to produce eggs or meat. Layer chickens produce eggs for about 2 years while broiler chickens are raised for approximately 7 weeks. The animal feed depending on the development stage and type of chicken, with the feed for broiler chickens high in protein. Processing consists of gathering, sorting and packaging eggs or slaughtering, eviscerating, defeathering, deboning and packaging for meat. 

  • Retail – this consists of the marketing and sale of eggs and meat products to consumers.  

What are the competition issues? 

While the merger primarily impacted the markets for chicken feed, day-old chicks and processed meat in Uganda, the CCC also considered the competition effects within the region given APDL’s wide network of relationships and cross-ownership. It considered the following competition concerns: 

 - Foreclosure effects: merging firms will be able to exclude competitors from accesing the market 

The merger between APDL and HMH Kuku raises concerns regarding the vertical integration of the supply chain. The supply of chicken feed is a core business activity of HMH Kuku and, while APDL is indirectly involved in this market, it is a leading providing of day-old chicks. The CCC considered that the merged firms could easily harm rivals by tying the supply of chicken feed with the supply of day-old chicks in Uganda or link the supply of day-old chicks with meat processing. 

 - Coordinated effects: merging firms can collude with ‘rivals’ by sharing market information 

The poultry market in the region consists of complex ownership structures; this has resulted in a wide network of relationships between different companies. These relationships could facilitate access to strategic information by ‘rival’ entities. For example, while HMH Kuku has links to the main breeding license holder for Cobb broiler chickens, APDL is linked to the license holder of the Ross breed. The merger could reinforce the geographic division of company operations across the continent and make it easier to share information and monitor sales. 

 - Unilateral effects: merging firms no longer compete and hold unilateral market power 

The CCC recognized that the proposed merger will not significantly alter the existing market, with the merged companies holding 30-35% share of the production and supply of chicken in Uganda. However, the merging companies leverage their dominant position in related markets by, for example, limiting its supply of day-old chicks for itself or prioritizing its own supply over the customers with whom it competes in the processing of chickens. 

What did the CCC decide? 

The CCC placed three key conditions on its approval of the merger. First, the merged company is prevented from linking and/or bundling its supply of day-old chicks with the supply of chicken feed and the processing of chickens in Uganda. Similarly, the merged company cannot refuse to sell its chicken feed to companies that compete with them in other market segments.   

Second, the merged companies are required to put in place information barriers between its businesses involved in the breeding and sale of day-old chicks (grandparent stock day-old chicks used for breeding and parent stock day-old chicks that supply farmers). This will ensure that sensitive customer information is not exchanged between the two market segments. 

Finally, APDL will no longer benefit from preferred customer status in the Ugandan market. This means that the conditions under which Aviagen East Africa supplies APDL with its breeding stock will need to be submitted to the CCC for approval. 

Why data and analysis matter 

Data and analysis are key for effective merger reviews. They proved essential to help the CCC understand the complex network of relationships and cross ownerships in the poultry market in the region. As a result of this understand, the CCC imposed comprehensive conditions on the APDL’s merger with HMH Kuku.   

Data and analysis are also important to understand the problem of so-called creeping mergers. These types of mergers do not raise competition concerns as individual acquisitions. However, when examined collectively, they weaken competition and increase market power. Competition authorities must conduct ongoing research to understand these relationships and their cross-border market implications when reviewing mergers. 

The Centre for Competition, Regulation and Economic Development’s African Market Observatory (AMO), co-funded by the Shamba Centre, has a long-standing partnership with the CCC and has provided extensive research and market studies for the agriculture and food sectors. This knowledge base offers a clear understanding of the dynamics within agriculture and food markets across sub-Saharan Africa and how they impact consumers and suppliers. To ensure fair, predictable and transparent markets, competition regulators rely upon research, data collection and analysis. In Africa, this support needs to be expanded. 

Arthur Mahuma is Research & Policy Analyst, Competition Law & Policy; Chilufya Sampa is Special Advisor, Competition Law and Policy; Natalie Mouyal is Senior Communications Manager.