The UK’s anti-trust regulator has found Belgium bakery group Vandemoortele’s planned takeover of Délifrance may hit competition in the country.
After the completion of a so-called “Phase 1″ investigation, the Competition and Markets Authority (CMA) said the merger “gives rise to a realistic prospect of a substantial lessening of competition”.
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Vandemoortele announced a move for fellow baker Délifrance in March and said the deal would create a €2.4bn (then $2.6bn) group, providing “solutions to retail and foodservice partners”.
In a statement yesterday (8 December), the CMA cited the impact the transaction could have on the supply of frozen laminated dough products in the country.
The watchdog said it assessed “a wide range of evidence” including internal documents and data gathered from third parties. It concluded Vandemoortele and Délifrance are “close” competitors. The combined business, the CMA added, would be the “largest” supplier of frozen Laminated Dough products in the UK by a “considerable margin”.
“While there is a broader range of competitors primarily active in continental Europe, the CMA has not seen evidence that this broader competitor set is relevant in the UK and would act as a sufficient competitive constraint on the merged entity post-merger.”
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By GlobalDataThe CMA will refer the proposed deal for an in-depth, “Phase 2” investigation unless the companies offer an acceptable undertaking to address the competition concerns. They have until 15 December to submit remedies.
In a statement, Vandemoortele told Just Food: “Vandemoortele confirms that it is currently engaged in constructive discussions with the CMA in the context of its ongoing review of the proposed transaction.
“The CMA’s market investigation has identified certain preliminary concerns, which is a standard part of merger assessments of this nature.
“Vandemoortele is working closely with the CMA to understand these points and to explore potential ways in which they can be addressed. As the process is ongoing, we cannot comment further on the specifics at this stage.”
The regulator also examined other overlapping product areas, including frozen bread, frozen patisserie and frozen savoury snacks.
In those segments, the parties have a “limited overlap” in the UK with “sufficient competition”, it said.
Earlier this month, the European Commission began reviewing certain concessions submitted by Vandemoortele in relation to the takeover.
Documents on the Commission’s website show its competition arm was notified about the deal in October, although the acquisition was first announced by family-owned Vandemoortele in March for an undisclosed sum.
Vandemoortele already runs 32 manufacturing plants and employs 4,094 workers, with its bakery products business generating an estimated turnover of €1.4bn.
Délifrance, a subsidiary of French grain cooperative Vivescia, generated turnover of around €930m in the year through June.
The company operates 14 production facilities, employs around 3,450 staff and supplies retail and out-of-home customers across Europe and in Asia.
In February, Vandemoortele snapped up Italian frozen bakery producer Lizzi, adding Bunge’s European margarine and spreads business the following month.
