Competition watchdog launches probe into Greencore deal

Britain’s competition regulator said it has opened a formal investigation into Greencore’s proposed £500 million takeover of ready-meals group Bakkavor. 

The Competition and Markets Authority (CMA) confirmed on Monday that it has “reasonable grounds for suspecting” the deal could substantially lessen competition in the convenience foods market .  Greencore, the UK’s largest sandwich maker, wants to acquire Bakkavor, a leading salad and meals company, in a deal announced in July. 

The CMA said it was concerned that merging two of the country’s biggest convenience food manufacturers might lead to higher prices or reduced choice for shoppers.  The watchdog has set a November 1 deadline for either clearing the deal or referring it to an in-depth phase two inquiry.

Greencore’s management insisted the deal would benefit consumers.  “This combination will create a stronger company capable of investing in innovation and efficiency,” a Greencore spokesperson said.  However, a CMA representative said the initial review is necessary given the significant market positions of the two firms. 

CMA officials pointed out that both companies already compete in sandwiches, salads and ready meals, and that the merged group would have extensive reach into supermarkets and foodservice outlets.  Industry analysts expect Greencore will closely engage with the CMA.  They note that the watchdog recently challenged other foodsector mergers.  Chief Economist Robert Gardner of Nationwide explained the move: “The CMA is simply ensuring that this acquisition does not result in higher costs for families already under pressure from inflation.”

If cleared, the deal would create a convenience food giant employing thousands in the UK, including bakery and manufacturing jobs.  Both companies said they will cooperate fully with the probe.  The CMA’s competition review follows extensive consultations with suppliers, retailers and consumer groups, who have raised concerns about market concentration. 

Greencore and Bakkavor will now focus on satisfying regulators that consumer interests will be protected.