The UK’s competition watchdog has referred Dairy Crest’s sale of cheese maker Millway to local peer Long Clawson Dairy over concerns it may hit competition in the supply of Stilton.
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The Office of Fair Trading has referred the GBP3.5m (US$6.1m) deal, which was agreed in July, to the UK’s Competition Commission.
The OFT noted that the UK’s six largest supermarket chains are collectively responsible for 90% of the country’s GBP65m (US$112.78m) annual sales of Stilton. These retailers have always awarded mainstream supply contracts for standard and mature Stilton to only three large-scale producers – the two merging parties and Tuxford and Tebbutt, the competition watchdog said.
The merger gives Long Clawson over 50% of UK Stilton sales.
The OFT rejected the argument that the purchasing power of the supermarkets meant that consumers would not be harmed by the merger.
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By GlobalData“The OFT has doubts that the bargaining power of the supermarkets would prevent a rise in wholesale and retail prices in this instance,” the regulator said.
The OFT therefore referred the merger on to the Competition Commission for further investigation.
“It is a bit early to say what the likely consequences of the referral will be,” a spokesperson for the OFT told just-food. “The Competition Commission will take into account our reasons for referring the merger to them and conduct their own investigation.”
