The Competition & Markets Authority (CMA) has provisionally cleared Pork Farms Group’s acquisition of chilled savoury pastry business Kerry Foods.
The merger was referred for investigation in January this year. The CMA has provisionally concluded that the merger has not resulted, and is not expected to result, in a substantial lessening of competition, and hence higher prices or lower quality for retailers or consumers for the products affected by the merger: hot pies, cold pies, sausage rolls, and pasties and slices.
John Wotton, chair of the Pork Farms Group/Kerry Foods merger group, said: “Looking across the different chilled savoury pastry (CSP) categories, we have provisionally concluded that the merger will not give the parties an opportunity to raise prices or reduce quality. The evidence we heard indicated that the merger would not significantly affect customers’ ability to negotiate for the best deal for these products.
“If necessary, customers such as retailers and wholesalers could switch to available alternative suppliers and we found that there was sufficient capacity, either currently available or which could be quickly brought into play, to allow customers to switch suppliers. As retailers have a degree of bargaining power, and the ability to encourage entry and expansion by alternative suppliers, and they compete closely with their rivals on price, it seems unlikely that the merged company would be able to force price rises on their customers and thus, indirectly, on consumers.
“Given the size of the sector and the popularity of these products, the fact that two of the largest suppliers had merged meant it was important for us to have the chance to examine in detail the possible effects on retailers and, by extension, consumers. However, on the basis of the evidence we have seen, we do not think either retailers or consumers will lose out from the merger.”
Chris Peters, group managing director at Pork Farms Group, said: “We are aware these findings are currently provisional and that we are still subject to the interim order, which requires us to continue to hold the acquired businesses separate. We continue to cooperate fully with the CMA.”
The inquiry group must publish its final decision by 21 June 2015.