- CMA says firms must address concerns about chilled sauces after probe
The merger of two UK food manufacturing giants could lead to a ‘substantial lessening of competition’ for the supply of chilled supermarket sauces, regulators have warned.
Britain’s Competition and Markets Authority on Monday said Greencore’s £1.2billion acquisition of rival Bakkavor could face a more thorough investigation if the pair fail to address its concerns.
Announced in early April, the deal is set to create a UK food-to-go giant with a combined revenue of around £4billion.
But unions have warned the Greencore deal could result in up to 1,500 job losses as well as factory closures.
Greencore is a prepared food specialist, which supplies all major supermarkets as well as Marks & Spencer.
The group, which has its headquarters in Dublin, with a British head office in Worksop and 14 factories, supplies nearly 750million food-to-go items each year and employs around 13,300 staff.
The deal is set to create a UK food-to-go giant with a combined revenue of around £4billion.
London-based Bakkavor employs 17,200 staff across 41 locations in Britain, the US and China.
It makes around 3,500 different freshly prepared food products, including meals, salads, desserts, dips, sauces, sandwiches, and pizza and bread products.
Having conducted an initial ‘phase one’ investigation into the deal launched in September, the CMA said said it did not have competition concerns regarding the vast majority of the companies’ operations.
However, the watchdog said the deal would create one of the largest supermarket suppliers for own-label chilled sauces.
While the merged group’s only two rivals – Two Sisters Food and Billington Goods – would provide ‘material’ competition, the CMA noted they are both ‘weaker’.
But the regulator dismissed concerns about competition in the market for chilled ready meals and own-label salads markets.
Greencore and Bakkavor, which hope to complete the deal early next year, have said they will work with the CMA in a bid to address its concerns and secure approval for the deal.
Dalton Philips, chief executive of Greencore, said: ‘The CMA process has been constructive and the phase one decision is a welcome one, confirming our view of the highly complementary nature of our businesses and product portfolios across ‘food for now’ and ‘food for later’.
Mike Edwards, chief executive of Bakkavor, added: ‘Today’s positive news from the CMA is a significant step forward in the process, providing welcome clarity which means we can collectively work at pace and stay on track to complete the transaction in early 2026.
‘Bakkavor is in great shape and we remain excited about joining the Greencore business and unlocking all the associated benefits we have highlighted for colleagues, customers and shareholders.’
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Supermarket sandwich giants’ £1.2billion merger faces questions over own-brand sauce
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