Issuing findings today (April 21 2015), John Wotton, chairman of the Pork Farms Caspian/Kerry Foods merger group, said: “Looking across the different CSP [chilled savoury pastry] 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.”
Price rises unlikely
Retailers had a degree of bargaining power, and the ability to encourage entry and expansion by alternative suppliers, and could compete closely with their rivals on price, said Wotton. As a result, price rises would be unlikely.
Responding to the news, Chris Peters, group md at Pork Farms Group, said: “We are very pleased with the CMA’s provisional conclusion that the merger has not resulted, and may not be expected to result, in a substantial lessening of competition.
“However, 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.”
Investigation
The merger was referred for an in-depth investigation in January 2015, to be carried out by an inquiry group of CMA independent panel members. The deal was first announced in August last year.
The transaction includes Kerry Foods’s manufacturing, warehouse and back office support functions at its Spalding and Poole sites. It also allows Pork Farms to make Kerry Foods’s Wall’s and Millers savoury pastry brands under licence.
Pork Farms Group and Kerry Foods make and supply branded and own-label products, including cold and hot pies, sausage rolls, pasties, slices and Scotch eggs, to customers including supermarkets, convenience stores and wholesalers.