UK – French-based baked goods manufacturer Cérélia has been blocked by the UK Competition and Markets Authority (CMA) from acquiring the Jus Rol brand from American multinational consumer goods company General Mills.
Jus-Rol is the best-selling brand in the bake-at-home dough category and its acquisition would have greatly bolstered Cérélia’s market position as the largest manufacturer of bake-at-home dough products in the UK.
Cérélia already enjoys a leadership position in the sector and produces private-label products on behalf of some of the largest grocery retailers in the country.
In delivering its ruling, the CMA noted that the acquisition of Jus Rol by Cérélia would result in a substantial lessening of competition (SLC) in the wholesale supply of dough-to-bake products to grocery retailers in the UK.
This, it noted, “would harm the interests of these retailers and, potentially, end-consumers of these products.”
Some of the adverse effects emanating from the merger, according to CMA, include higher prices, lower quality products, and reduced innovation compared to what would otherwise have been the case absent the merger.
The CMA said it has identified “only one suitable remedy” to the issue, which is the full divestiture of the Jus-Rol UK business assets acquired by Cérélia in the deal.
“We consider that a full divestiture of the Jus-Rol UK business assets would be similar to a prohibition of the merger and it would re-create a similar market structure to that which existed at the time of the merger,” it said.
We are deeply disappointed with today’s announcement which, if confirmed in a final decision, would negatively impact the UK grocery sector, affecting its value, blocking much-needed investment into growth and depriving shoppers of the benefits of important investment and innovation in the home baking segment.
Today’s ruling does not affect the sale of the European dough assets. In March, the German competition authority unconditionally cleared the sale of local bake-at-home brand Knack & Back. Irish competition officials have not raised concerns about the deal, Just Food understands.
The deal, announced last November, saw General Mills agree to sell its European dough businesses – including the Knack & Back and Jus-Rol brands – to the France-based bakery group, a specialist in ready-to-bake dough, operating in both the private-label and retail channels.
Responding to the CMA ruling, UK pastry and dough maker BakeAway – acquired by Cérélia in 2016 – said the company disagreed with the findings and will work with the watchdog to find a solution.
It suggested the CMA’s provisional findings “fail to reflect how competition works in the [UK] grocery market and contain material errors of assessment”.
Managing director Jan Boers said: “We are deeply disappointed with today’s announcement which, if confirmed in a final decision, would negatively impact the UK grocery sector, affecting its value, blocking much-needed investment into growth and depriving shoppers of the benefits of important investment and innovation in the home baking segment.
Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro-industry. SUBSCRIBE HERE.