The Competition Appeal Tribunal has upheld the Competition and Markets Authority (CMA)’s decision to block Cérélia group’s acquisition of UK frozen pastry manufacturer Jus-Rol.
Following a hearing in July, the tribunal on Friday (1 September) unanimously dismissed all four grounds of Cérélia’s appeal against the competition regulator’s Phase 2 decision, which was announced in January of this year.
This had come after a near year-long investigation into French-headquartered Cérélia’s deal to purchase Jus-Rol from General Mills in late 2021.
CMA chief executive Sarah Cardell welcomed the tribunal’s judgment, noting it confirmed that the CMA’s decision to block the merger was fully supported by the evidence and was procedurally fair.
“Cérélia must now sell off Jus-Rol in its entirety to make sure shoppers don’t face higher prices and worse quality products,” Cardell added.
As the two leading ready-to-bake dough suppliers in the UK market by a considerable margin, Cérélia and Jus-Rol were found to be facing limited competition with all other suppliers being far smaller and many of them lacking the capabilities held by the pair.
In addition, evidence from grocery retailers showed that they considered Cérélia and Jus-Rol’s products to be important alternatives to one another – with grocers telling the CMA that the ability to trade off Jus-Rol against Cérélia, and vice versa, when buying their products allowed them to get a better deal for their customers.
The CMA had concluded that the only way to ‘preserve the degree of competition and choice for consumers’ was for Jus-Rol to be sold to an independent buyer.
The tribunal confirmed that the CMA had gathered and carefully weighed a great deal of information and evidence for its assessment, and had not made any error of fact or law. It also considered that the scope of the ruling was well reasoned and proportionate, and that the process followed by the CMA was rational and fair.
Cérélia had already given final undertakings to sell the Jus-Rol business but this process was suspended pending the outcome of its appeal. Following the judgment, the CMA now expects Cérélia to commence the sale process.
Cérélia considers appeal
Commenting following the tribunal ruling, BakeAway – the UK arm of Cérélia – said it was “disappointed” and stood by its view that the CMA misunderstands the competitive market dynamic in which it operates.
It claimed the CMA never specifically analysed what impact the merger would have on the price and quality offering for consumers but “focused on the supply of dough-to-bake products to grocery retailers”.
It added it was considering all options, including an appeal.
“We’re very disappointed with the final ruling and still believe that the pastry and dough category is in desperate need of innovation and investment,” said BakeAway managing director Jan Boers.
“We sought to create a more innovative market offer for UK consumers and a more price competitive category. We remain committed to those goals.”
BakeAway explained that, if it pursues an appeal, no action would be taken to sell Jus-Rol until the appeal has been determined.
BakeAway was acquired by Cérélia in 2016, with the business building a brand-new 92,500 sq ft factory four years later in Corby, Northamptonshire, out of which it supplies own-label pastry and dough products to grocery retailers. BakeAway announced the appointment of Marc Garcia as its new UK operations director last week.
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