Long Clawson Dairy has welcomed the provisional clearance of its acquisition of Dairy Crest's Millway business, as the site has been continuing to run at a loss since the Competition Commission (CC) launched its investigation.
In October, the Office of Fair Trading (OFT) claimed that the acquisition would mean that Long Clawson was in a position to supply over 50% of the total UK sales of Stilton. The OFT said that, despite the buying power of supermarkets, the reduction from three to two major Stilton suppliers could result in a price increase being passed on to retailers and, ultimately, consumers.
But the CC’s provisional findings report, published on Friday, concluded that without its sale to Long Clawson, the Millway business at Hartington (Derbyshire) would have been closed by Dairy Crest. The CC said that, compared with this alternative outcome, the loss of competition caused by the merger is likely to be “small” and will not lead to a substantial lessening of competition for the supply of Blue Stilton cheese in the UK.
Chief executive of Long Clawson, Martin Taylor, said that he welcomed the findings but said they are still only “provisional” at the moment. He said that Long Clawson had been forced to run the loss-making Millway site at Hartington as a separate businesses since the investigation was launched.
He said that while the investigation continued, Long Clawson was losing money in legal and operational costs: “So what we really want is for a full clearance and then we can bring the site in line with our business plans, which legally cannot happen until the investigation is complete.”
Taylor suggested earlier in the year that Long Clawson planned a full or partial closure of the Hartington site, which he said was likely to result in “significant redundancies as a minimum”. He also said that it wanted to fold some or part of the volume into its three other sites in the Derbyshire area with minimal investment. The sites include Long Clawson, Harby and Bottesford.
“These plans would help put an end to the Hartington site losing money,” said Taylor. “But instead they have been put on hold, along with the detailed employee consultation that began on July 30, until the CC has completely cleared its investigation.”