The UK’s competition watchdog has given the green light to Vandemoortele’s acquisition of bakery peer Délifrance but with a new proviso.
Belgium-based Vandemoortele has agreed to sell its sales operation in Staines-upon-Thames in the south-east England region of Surrey to a “suitable purchaser”, the Competition and Markets Authority (CMA) said.
Vandemoortele had previously committed to dispose of its factory in the UK city of Worcester, including the plant’s assets, contracts and its 73 production staff, and to cease customer relationships.
That pledge still stands as the regulator said today (20 August) the “decision marks the end of the CMA’s investigation”. It added the watchdog will monitor Vandemoortele’s “progress in implementing the remedy”.
The Belgium group first struck the deal for Délifrance in March last year but it attracted the attention of competition authorities in Europe and the UK.
To allay EU concerns, Vandemoortele pledged to sell two Délifrance facilities in France. However, when a buyer for those sites failed to materialise, the CMA then launched its so-called Phase 2 investigation in June this year amid its initial findings that the transaction would lead to a “substantial lessening of competition”.
Competition concerns lay with the fact both Vandemoortele and Délifrance supplied frozen viennoiserie products such as croissants and pains au chocolat to the retail and foodservice channels, which were then baked on site.
The CMA assessed that Vandemoortele would become the largest supplier of those products, potentially reducing competition and leading to higher prices.
Martin Coleman, chair of the CMA’s independent inquiry group, said today: “We’ve quickly concluded this investigation having engaged with Vandemoortele to find an effective and proportionate solution to the concerns we identified.
“Competition helps keep prices low and this is particularly important in wholesale markets like frozen pastry products which are sold to everyday shoppers in cafés and supermarket bakeries.
“Transferring Vandemoortele’s UK sales operations to an independent operator will protect competition and help keep prices in check for consumers.”
Despite the pledges, Vandemoortele will continue to operate in the UK.
The company has 28 manufacturing plants and 3,500 workers and supplies markets in Europe and the US. Its frozen bakery brands include Lizzi, Banquet d’Or and Lanterna, while the business also produces for private-label customers.
Délifrance operates 14 production facilities, supplying retail and out-of-home customers across Europe and in Asia. The business employs more than 3,200 staff.
The deal with Délifrance is expected to create a business with combined revenue of €2.4bn ($2.8bn).
