French ready-to-bake firm Cérélia’s purchase of Jus-Rol could leave UK retailers and shoppers facing higher prices and lower quality products, the Competition and Markets Authority (CMA) has ruled.
As such, the Authority has concluded the only way to ‘preserve the degree of competition and choice for consumers’ is for Jus-Rol to be sold to an independent buyer.
However, Cérélia said it disagrees with the decision and plans to launch an appeal.
The business agreed to buy the Jus-Rol from General Mills in late 2021 with the CMA launching an in-depth investigation into the deal in February 2022. The investigation analysed evidence from Cérélia and Jus-Rol, grocery retailers and other industry players to understand the market, as well as the potential impact of the deal.
Today (20 January 2023) the CMA published its final decision which concluded that the merger would ‘substantially lessen competition, putting UK grocers at risk of higher prices and lower quality products – which could ultimately be passed on to shoppers’.
Cérélia and Jus-Rol account for nearly two-thirds of all products in this market sold to grocery retailers in the UK, according to the CMA which noted that, at present, the two firms face limited competition as other suppliers are far smaller and lack the capabilities held by Cérélia and Jus-Rol.
“As living costs continue to rise, it’s our responsibility to make sure that competition can play its part in delivering the best possible deals for customers,” said Margot Daly, chair of the independent panel of experts conducting this Phase 2 investigation.
“Cérélia and Jus-Rol are the biggest players in this market by far and losing the competition that takes place between them could result in customers facing higher prices and worse quality products. Today’s decision will ensure that doesn’t happen,” Daly added.
Cérélia responds
In response, Cérélia said it will appeal the decision as ‘the company stands by its ambition to strengthen the dough to bake category through investment and product innovation, bringing more choice and inspiration to UK customers’.
The business also strongly rejects the CMA’s view that Cérélia would be able to determine the prices of dough to bake products charged to UK consumers.
Cérélia president, Guillaume Reveilhac, said he was “deeply disappointed by today’s fundamentally flawed decision”.
“Rather than protecting the interests of UK consumers and the UK economy in these difficult times, the CMA decision blocks much-needed investment into new and exciting affordable products in the UK home baking segment. The decision cannot be rationalised,” he added.
Reveilhac highlighted that Cérélia already produces Jus-Rol products via its UK arm BakeAway which is based in Corby, Northamptonshire. Cérélia made a significant investment in the UK by building the new factory to bring production of the Jus-Rol brand back to the UK.
The deal offered Cérélia the opportunity to manage and grow what it described as a ‘long underinvested brand’.
“Today’s decision is underpinned by erroneous reasoning and raises questions about our ability to continue to serve UK retailers and consumers in the best possible way. That would be a most unfortunate outcome should the CMA decision stand. We will look to an appeal to ensure that the decision does not stand,” Reveilhac concluded.
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