The UK’s competition regulator is referring Vandemoortele’s acquisition of bakery peer Délifrance to an in-depth investigation.
First announced in March last year, the deal had raised competition concerns in both the UK and Europe but Belgium-based Vandemoortele had pledged in December to sell two plants owned by Délifrance.
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In order to get the acquisition approved by competition authorities, the family-owned group committed to dispose of the pair of frozen laminated dough facilities in Avignon in the south of France and another in Béthune in the north.
While the European Commission provisionally approved the deal in December on those conditions, a buyer has not yet materialised.
For that reason, the UK’s Competition and Markets Authority (CMA) said today (22 April) that it will now launch a so-called Phase 2 investigation.
The regulator said it had assumed the sale of the two plants “might be capable of resolving its competition concerns” but added “the period to resolve those concerns has now expired, and Vandemoortele has not formally submitted a proposed buyer for approval by the CMA”.
Explaining the conclusions arising from its initial Phase 1 probe, the CMA said it “found that the merger could lead to Vandemoortele becoming the largest supplier of frozen viennoiserie products in the UK by a considerable margin, and could substantially affect competition in the supply of these products, potentially leading to higher prices or lower quality for customers in the UK”.
Both companies supply frozen products such as croissants and pains au chocolat to retail and foodservice customers, it said.
“While the CMA has engaged closely with Vandemoortele to support its delivery of a resolution, Vandemoortele has not put forward a proposed sale,” today’s statement read.
Just Food has contacted Vandemoortele for comment.
When the deal was announced in March, Vandemoortele said the combination with Délifrance would create a €2.4bn ($2.6bn) bakery group, providing “solutions to retail and foodservice partners”.
Délifrance operates 14 production facilities, employs more than 3,200 staff and supplies retail and out-of-home customers across Europe and in Asia.
Vandemoortele has 28 manufacturing plants and 3,500 workers. The company’s frozen bakery brands include Lizzi, Banquet d’Or and Lanterna, while the business also produces for private-label clients. It supplies markets in Europe and the US.
Giving its conditional approval in December, the European Commission said: “These structural commitments fully address the competition concerns.
“Following positive feedback received after the market test, the Commission has concluded that the transaction, as modified by the commitments, would no longer raise competition concerns.”
