The sale this year by Kerry Foods of its UK pork pie operations is causing ructions in the UK, with the Competition and Markets Authority there raising a red flag to the sale.
The Competition and Markets Authority (CMA) has said the sale, which happened in August, will see the new owner of – Pork Farms – with too large a share of the pork pie market.
According to the CMA, it 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 August 17, 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, it says.
It is unclear whether the CMA will stop the sale going ahead at this point.
