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CMA: Pork pies merger may give rise to concerns

London / UK. (gov) The British Competition and Marketing Authorities CMA has found that Pork Farms´ completed acquisition of Kerry Foods´ chilled savoury pastry (CSP) business gives rise to a realistic prospect of a substantial lessening of competition and will be referred for an in-depth phase two investigation unless acceptable undertakings are offered.

Pork Farms´ and Kerry Foods´ CSP business both manufacture and supply branded and own label CSP pork products to the food retail sector. The CSP sector includes a range of products, such as pork pies, sausage rolls, pasties and slices, quiches and scotch eggs, and is worth approximately £1 billion a year.

The Competition and Markets Authority (CMA) found that, as a result of the transaction, which completed on 17 August 2014, the merged entity will become the largest or second largest manufacturer and supplier of some CSP products to grocery retailers and to convenience stores, either as own label or branded goods. For these products, the merged entity will face competition from only one or two other large suppliers.

The CMA has found that there is a realistic prospect that the merger will result in a substantial lessening of competition in the branded, own label and convenience retail segments of the supply of cold pies, and the supply of sausage rolls, pasties and slices – when considered in combination – or the supply of sausage rolls (when considered individually). The CMA has also found that there is a realistic prospect that the merger will result in a substantial lessening of competition in the own label segment of the supply of hot pies. The CMA is concerned that a lessening of competition may result in higher prices or a reduction in choice or quality for consumers of these CSP products.

This transaction will be referred for an in-depth phase two investigation unless Pork Farms offers acceptable undertakings to address the competition concerns in a clear-cut manner.

Andrea Coscelli, Executive Director, Markets and Mergers and decision maker in this case said: «These are very popular products which are currently produced by a small number of manufacturers. This merger will further reduce the choice available to retailers and consumers and may give the merged company the ability to raise prices or reduce the quality of these products. Unless Pork Farms offers undertakings that resolve these concerns, we think it is necessary to investigate the merger in greater detail to see whether it could harm consumers´ interests».