Boparan Offers Undertakings to Ease OFT Concerns Over Food Merger

Jack Humphrey, Regulatory journalist
March 21, 2012 /

The OFT is considering undertakings offered by Boparan Holdings Ltd (BHL) to sell a Christmas pudding manufacturing business to remedy competition concerns raised by its proposed acquisition of R F Brookes and Avana Bakeries from Premier Foods Ltd.

The parties supply own-label foods to the UK’s major supermarkets and grocery retailers. While the OFT’s investigation found no competition concerns in relation to chilled ready meals, chilled pizzas and chilled savoury pastries, it concluded that the acquisition would give rise to concerns with respect to the supply of Christmas puddings.

The merger would bring together the two largest suppliers of Christmas puddings who together account for the vast majority of UK supply. A number of the parties’ customers raised significant concerns that, due to the distinctive seasonal demand for Christmas puddings, the merger might result in price increases.

The OFT considered the prospect of entry and expansion, including by firms already producing other types of steamed puddings, but did not find evidence that firms had sufficient capacity or experience to engage in production on a large scale.

In order to meet the OFT’s concerns, BHL has offered to sell one of the two Christmas pudding manufacturing businesses to a suitable purchaser approved by the OFT in order to ensure that there is competition in this market going forward.

Amelia Fletcher, OFT Chief Economist and Decision Maker in this case, said: “This merger brings together the two main suppliers of Christmas puddings to the major grocery retailers in the UK and although these puddings might only be purchased once a year, total sales are over £40 million a year. We are concerned that this loss of competition could ultimately lead to price rises for consumers at a time of year which is already very costly for families. The OFT is now considering the remedy offered by the parties to remove these competition concerns.”

While the undertakings in lieu are being considered, the OFT’s duty to refer the merger to the Competition Commission is suspended.

 

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