The UK Competition and Markets Authority (CMA) has proposed to accept remedies offered by Greencore Group and Bakkavor Group in relation to their proposed merger, following concerns that the deal could harm competition in certain food supply markets.
Greencore’s planned acquisition of Bakkavor would create one of the UK’s largest convenience food businesses. Both companies are key suppliers of chilled convenience foods to leading supermarket chains, including Tesco, Marks & Spencer, Sainsbury’s, Waitrose, and Asda.
Competition Concerns
The CMA’s Phase 1 investigation concluded that the merger could result in a substantial lessening of competition in the market for own-label chilled sauces, such as pasta and stir-fry sauces. According to the authority, this could potentially lead to higher prices or reduced quality for consumers in the UK.
While the CMA examined several product categories—including Italian chilled ready meals and salads—it determined that the transaction was unlikely to significantly affect competition in those markets.
Proposed Remedies
To address the CMA’s concerns, Greencore and Bakkavor have offered to divest Greencore’s only chilled sauce and soups manufacturing facility, located in Bristol. The CMA has indicated that this remedy, if properly implemented, could mitigate the identified competition risks.
The authority will now consult on the composition of the divestment package and the identity of the potential buyer before reaching a final decision.
CMA Statement
Joel Bamford, Executive Director of Mergers at the CMA, underscored the importance of maintaining competitive prices for everyday consumers:
“The cost of our weekly shop matters to us all, so we must take decisions that ensure there is effective competition helping to keep product prices as low as possible on supermarket shelves. Our assessment found Greencore’s deal to buy Bakkavor could raise prices at the till.
Following close engagement with Greencore and Bakkavor we’ve secured remedies which we believe have the potential to address our competition concerns – so we have accepted the remedies in principle today and will now work towards a final resolution.”
Next Steps
The CMA’s consultation on the proposed remedies will determine whether the divestment package sufficiently addresses its concerns. Subject to the outcome of this process, the authority may grant final clearance for the transaction.