Cérélia has lost a legal challenge against the UK competition regulator’s order that the French bakery group sell part of dough business Jus-Rol.
The Competition and Markets Authority (CMA) said on Friday (1 September) its appeals tribunal had “fully dismissed a legal challenge by Cérélia” to reverse the initial ruling – brought in January – that the bakery group dispose of the UK arm of Jus-Rol.
At the time of that order in January, Cérélia said it would contest the ruling. However, the CMA said on Friday the tribunal had dismissed the challenge brought by the bakery group at a hearing in July.
Cérélia operates in the UK through its subsidiary BakeAway, which told Just Food the business plans to appeal the CMA’s decision, noting the investment made in the Jus-Rol factory in Corby, in the East Midlands county of Northhamptonshire.
Sarah Cardell, CEO of the CMA, said in a statement: “We welcome today’s judgment, which fully dismisses all four grounds of Cérélia’s appeal, and confirms that the CMA’s decision to block this merger was fully supported by the evidence and procedurally fair.
“Cérélia must now sell off Jus-Rol in its entirety to make sure shoppers don’t face higher prices and worse quality products.”
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The French group first submitted a proposal in November 2021 to acquire Jus-Rol’s European business from US-based General Mills. Cérélia’s bid, and consequent purchase of Jus-Rol, included assets in the UK, Germany and Ireland.
However, the CMA blocked the UK side of the deal in 2022 and in January this year submitted its final conclusion that Cérélia must dispose of the business.
The CMA concluded in January – under a so-called Phase-2 decision – that the deal would substantially lessen competition, putting UK grocers at risk of higher prices and lower quality products for shoppers.
Jan Boers, managing director at BakeAway said in a statement provided to Just Food: “We’re very disappointed with the final ruling and still believe that the pastry and dough category is in desperate need of innovation and investment.
“In line with the UK government’s ambition to drive growth, we purchased the Jus-Rol brand and brought production back to the UK, to the new factory we built in Corby.
“We sought to create a more innovative market offer for UK consumers and a more price competitive category by bringing together our expertise in pastry and dough and the strength of the Jus-Rol brand. We remain committed to those goals, and we are now considering all our options, including an appeal.”
On Friday, the CMA said the tribunal’s decision was based on the fact that the “deal brought together the two leading suppliers in the market by a considerable margin, and that they face limited competition, with all other suppliers being far smaller and many of them lacking the capabilities held by Cérélia and Jus-Rol”.
It added: “Evidence from grocery retailers showed that they consider Cérélia and Jus-Rol’s products to be important alternatives to one another – with grocers telling the CMA that the ability to trade off Jus-Rol against Cérélia, and vice versa, when buying their products allows them to get a better deal for their customers.”
In January, Cérélia said the CMA’s disposal ruling was “relying on flawed conclusions that the acquisition would result in higher prices and reduced choice for both retailers and consumers”.
BakeAway said in its statement: “If BakeAway pursues an appeal, no action would be taken with respect to divestment until the appeal has been determined. Pursuant to the final undertakings, such a divestment would be either a total or partial sale of the Jus-Rol brand, at the option of the purchaser.”
The company added: “BakeAway stands by its view that the CMA misunderstands the competitive market dynamic in which it operates and has downplayed the future benefits of the acquisition for consumers. In fact, the CMA never specifically analysed what impact the merger would have on the price and quality offering for consumers, if any.
“Rather, the CMA ‘focused on the supply of dough-to-bake products to grocery retailers’ and their ease of doing business rather than making any findings as to impact on price and quality for consumers.”