Competition concerns raised over Cérélia’s purchase of Jus-Rol
The CMA launched an in-depth review into the deal in June 2022 after an initial Phase 1 investigation raised concerns about possible competition issues.
Over the past five months, a CMA panel has analysed a wide range of evidence from Cérélia and General Mills owned Jus-Rol, grocery retailers and other industry players in order to fully understand the market, as well as the potential impact of the deal.
The investigation has provisionally found that Cérélia’s purchase of Jus-Rol could leave UK retailers and shoppers facing higher prices and lower quality products. Its decision is still provisional and the CMA will now consult on its findings and will listen to any further views before reaching a final decision.
Jus-Rol is the largest supplier of branded ready-to-bake products in the UK, while Cérélia is the largest supplier of own-brand ready-to-bake products.
Investigation
The investigation has provisionally said that the merger brings together what are the two leading suppliers in the market by a considerable margin. Ready-to-bake items supplied by Cérélia and Jus-Rol account for nearly two-thirds of all such products sold in the UK, the CMA said.
While there are differences between the companies’ products, Jus-Rol products compete with grocery retailers’ own-brand products supplied by Cérélia for the same space on many supermarket shelves, the competition organisation said.
It said that evidence from grocery retailers shows that they consider the companies’ products to be important alternatives to one another – in particular because there are few alternative suppliers of either branded or own-brand products. Grocery retailers also told the CMA that their ability to trade off Jus-Rol and Cérélia when purchasing these products enables them to get a better deal for customers.
Its investigation has provisionally found that the two businesses face very limited competition, with all other suppliers being far smaller, and many lacking the capabilities held by the merging businesses.
Loss of competition
The CMA also provisionally found it is unlikely that any supplier would enter the market, or expand its existing activities, to address the loss of competition brought about by the deal.
A General Mills spokesperson said: “It is business as usual at General Mills and we will continue to produce the much-loved Jus-Rol pastry products for customers and to support employees whilst Bakeaway (the trading name of Cerelia in the UK) consider their appropriate course of action.”
Margot Daly, chair of the independent inquiry group carrying out the Phase 2 investigation, said: “Food prices are already increasing, which makes it important that we don’t allow a lack of competition to make the situation worse.
“Jus-Rol and Cérélia are by far the largest suppliers in the ready-to-bake sector and the competition that takes place between them helps grocers to give shoppers the best possible deals.”
The CMA has called for responses from interested parties to its provisional findings by 25 November 2022.
