The UK’s competition watchdog has provisionally cleared Kerry Group’s acquisition of frozen ready meals maker Headland Foods.

The deal, which was struck in January, was referred to the Competition Commission by the Office of Fair Trading after complaints from retail customers that the takeover had led to higher prices.

However, the Commission said today (25 October) that several customers had found alternative suppliers after Kerry proposed price increases. The customers were paying prices similar to those they had paid before changing suppliers, it said.

That success led the Commission to “provisionally conclude” that Kerry’s acquisition would not lead to a “substantial lessening” of competition.

“The response to Kerry/Headland’s initial post-merger price rise showed that customers do have sufficient supply alternatives readily available and at a competitive cost,” Laura Carstensen, the Commission’s deputy chairman, said. “Although it would appear that these alternatives were not fully realised prior to the merger, their existence and the availability of further capacity if necessary, should put a brake on price rises from Kerry in the future.”

The Commission plans to publish its final report on the deal by late December.

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