Important Facts of the News
- Greencore plans to acquire Bakkavor Group.
- Both companies supply fresh and convenience foods to major UK supermarkets.
- CMA Phase 1 review identified a risk of reduced competition in own label chilled sauces.
- Potential impact was higher prices or lower quality for shoppers.
- Proposed remedy is the sale of Greencore’s only chilled sauce and soups factory in Bristol.
- CMA has accepted the remedy in principle and will consult further.
- Other product areas such as Italian chilled ready meals and salads were reviewed with no competition concerns found.
Overview
The Competition and Markets Authority has indicated it is ready to accept a set of remedies after examining Greencore Group’s plan to purchase Bakkavor Group. The move would combine two influential suppliers of ready to eat and fresh prepared foods in the UK.
About the Businesses
Greencore is a leading producer, supplier and distributor focused on convenience foods within the UK. Bakkavor operates across the UK, Ireland and the United States as a global supplier of fresh prepared food. Their products are widely stocked by supermarket chains including Tesco, Marks and Spencer, Sainsbury’s, Waitrose and Asda.
CMA Findings
During its initial assessment, the authority examined how the merger could influence competition across several food lines. It concluded that the combination might significantly reduce competition in the supply of supermarket own label chilled sauces such as pasta and stir fry options. According to the assessment, this might result in increased costs at the checkout or a drop in product standards for shoppers.
Proposed Remedy
To address the concerns, Greencore and Bakkavor have suggested selling Greencore’s single site for chilled sauce and soup production located in Bristol. The authority has stated that this proposal could be sufficient to tackle the competition issues flagged. It will now seek views on the remedy package and the suitability of the future buyer.
Next Steps
The authority has accepted the proposals in principle and will work towards a final decision after consultation. Additional information on the remedies is expected to be made publicly available.
Additional Points from the Review
As part of the initial review, several other categories like Italian chilled ready meals and salads were examined. The authority found no indication that the transaction would create a significant reduction in competition in those segments.