The Office of Fair Trading (OFT) has said that if Princes and Premier Foods divest the Fray Bentos brand it will not refer the sale of Premier Foods’ canned grocery operations to the Competition Commission.
It said today (22 June) that in lieu of a reference to the Competition Commission and the suspension of its duty to refer, the companies have offered to divest the Fray Bentos brand and some accompanying manufacturing assets.
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The OFT was concerned that the merger would lead to competition concerns in relation to the supply of canned pies in the UK. Princes and Premier Foods are the two major canned pie manufacturers and suppliers to retailers in the UK, with significant shares of both branded and own-label canned pie production, the OFT said.
Premier Foods reached the agreement with Princes, worth GBP182m (US$293.5m), in February this year. The sale includes the Crosse & Blackwell, Farrows, Fray Bentos and Smedley’s brands.
Princes supplies under its own brand name and Premier supplies under the Fray Bentos brand.
The OFT said that given that there may be a restricted number of purchasers able to acquire the divestment package, the divestment undertaking will be the subject of an upfront buyer requirement and the OFT will assess the suitability of any proposed purchaser before deciding to accept the undertakings offered by the parties.
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By GlobalData“The evidence in this case suggests that post-merger the parties would have a near monopoly in the provision of canned pies. We are concerned that consumers will be left with extremely limited choices in relation to this product, as well as unwelcome price rises,” said OFT chief economist and decision maker in this case, Amelia Fletcher.
“The parties have offered to divest the Fray Bentos brand along with manufacturing assets. The OFT generally requires remedies to be clear-cut and capable of being readily implementable. The proposed remedy appears to achieve both these aims. In the event that a buyer is not found or accepted as a suitable purchaser by the OFT, a reference will be made to the Competition Commission.”
