The UK’s Competition Commission (CC) has launched an investigation into Dairy Crest’s sale of cheese maker Millway to local peer Long Clawson Dairy over concerns it could reduce competition in the supply of Stilton.
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The GBP3.5m (US$6.1m) deal, which was agreed in July, was referred to the CC last month by the Office of Fair Trading.
Because the merger gives Long Clawson over 50% of UK Stilton sales, there is a concern that the deal would lessen competition in the market.
The CC said this afternoon (6 November) that an “enquiry group” would “consider the possible competitive effects of the merger within each of the relevant markets it identifies”.
If the merger is found to substantially weaken competition in the market, the CC will then determine what remedies might be appropriate, taking into account any customer benefits that might arise from the acquisition.
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By GlobalDataA spokesperson for the competition watchdog told just-food that remedies could consist of a number of possibilities, including undoing the merger.
“Structural remedies, such as divestiture or prohibition, are likely to be preferable to behavioural remedies, which seek to regulate the behaviour of firms, as structural remedies address the effects of a merger more directly and will usually require less monitoring or enforcement of compliance,” the spokesperson said.
“However, behavioural remedies may be considered more suitable in some circumstances, for example where the significant lessening of competition is expected to be of limited duration or where the relevant customer benefits expected from a merger are substantial and behavioural remedies are likely to be more effective in preserving these than structural remedies.”
