The UK’s Competition and Markets Authority (CMA) is to delve further into the deal that saw US food major General Mills sell its European dough businesses to France’s Cérélia late last year.

The CMA believes the deal as it stands would lessen competition in the market and “could lead to higher prices and lower quality products for shoppers”.

It has made an initial enforcement order to halt the deal. The regulator will carry out an in-depth phase 2 investigation into the transaction, unless it receives assurance from Cérélia that will address its concerns.

The deal, announced last November, saw General Mills agree to sell its European dough businesses – including the Knack & Back and Jus-Rol brands – to the France-based bakery group, a specialist in ready-to-bake dough, operating in both the private-label and retail channels.

Cérélia is the largest manufacturer of bake-at-home dough products in the UK, producing private-label products on behalf of some of the largest grocery retailers in the country.

Jus-Rol is the best-selling brand in the bake-at-home dough category.

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The CMA said that, following the completion of the deal, Cérélia would produce and sell both the Jus-Rol products and private-label products, “leaving retailers with fewer alternatives”.

In its announcement today (30 May), the watchdog said: “The CMA has decided, on the information currently available to it, that it is or may be the case that this merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

“This merger will be referred for a phase two investigation unless the parties offer acceptable undertakings to address these competition concerns.”

Summarising its decision, the CMA said: “Cérélia and the Jus-Rol Business overlap at the wholesale level of the supply chain, providing dough-to-bake products – including ingredient pastry, pizza dough and other ready-to-bake dough products – to grocery retailers in the UK.

“Cérélia supplies these products for onward sale to end consumers under private label (eg supermarket own brand), while the Jus-Rol Business does so under the Jus-Rol brand.”

It said the businesses together have a market share of more than 25% in the supply of dough-to-bake products to grocery retailers in the UK.

It added: “The CMA believes that the merged entity could increase wholesale prices and/or degrade non-price aspects of its offering such as quality, range, innovation, in particular with the aim of diverting sales from private-label to the Jus-Rol brand.”

The CMA made an initial enforcement order on 12 May that prevents Cérélia from taking any action which might lead to the integration of the Jus-Rol business with its own.

It said that Cérélia has until 8 June to “offer an undertaking to the CMA that might be accepted by the CMA”.

Sorcha O’Carroll, senior director of mergers at the CMA, said: “Consumers should know they’re getting value for money and not overpaying for their grocery products, especially as the current cost-of-living crisis stretches people’s budget even further. That’s why we won’t hesitate to refer this investigation further if our concerns aren’t addressed.”

Just Food has asked Cérélia for its response to the CMA’s statement.