CMA provisionally clears packaging merger
The CMA has provisionally cleared the completed acquisition by Sonoco Products Company of Weidenhammer Packaging Group.
Sonoco and Weidenhammer both produce composite cans (rigid tubes with closures on each end) which are supplied to customers for packaging both food and non-food products. Typical uses include packaging for food products such as gravy granules, chocolate powder, crisps, crackers and coffee, and non-food products such as tobacco and insect repellent. Both companies have UK subsidiaries with domestic production plants.
The Competition and Markets Authority (CMA) referred the case for an in-depth phase 2 inquiry in January 2015 and the inquiry group of independent CMA panel members assessing the merger has provisionally decided to clear the merger.
The group believes customers of composite cans for food products will be protected from the risk of the merged company raising prices, or reducing quality, through their ability to switch to other suppliers or to alternative forms of packaging.
In addition, it is likely that if prices increased (or quality decreased) new firms would enter this market, potentially sponsored by larger customers looking for alternative suppliers. Specifically, the group has seen evidence that this type of sponsored entry by a European supplier into the UK market would be likely. Some customers could also move to self-supply.
The group did not find any issues with the merger in relation to the market for composite cans for non-food products.
Martin Cave, Inquiry Chair, said:
The 2 companies have been close competitors and the main suppliers of these products for many customers and we have looked carefully at the possible effects of this merger.
After considering the available evidence overall, our provisional view is that, on balance, the merged company will be kept in check by most customers having the ability to switch to alternative suppliers or different types of packaging.
Already, trends in the consumer packaging industry have moved towards other types of packaging and many products which formerly used composite cans now use different formats. Larger customers also have the option of sponsoring new entry or self-supplying. As with all our provisional decisions, we will look closely at the responses we receive before we take a final decision.
The inquiry group must publish its final report by 13 July 2015. A summary of the provisional findings report and all other information relating to the inquiry are available on the case page. The full provisional findings report will be published in due course.
Anyone wishing to respond to the provisional findings should do so in writing, by no later than 5pm on 19 June 2015, to email@example.com or write to:
Sonoco/Weidenhammer merger inquiry
Competition and Markets Authority
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. From 1 April 2014 it took over the functions of the Competition Commission and the competition and certain consumer functions of the Office of Fair Trading, as amended by the Enterprise and Regulatory Reform Act 2013.
- All the CMA’s functions in phase 2 merger inquiries are performed by inquiry groups chosen from the CMA’s panel members. The appointed inquiry group are the decision makers on phase 2 inquiries.
- The CMA’s panel members come from a variety of backgrounds, including economics, law, accountancy and/or business; the membership of an inquiry group usually reflects a mix of expertise and experience (including industry experience).
- The members of the Sonoco/Weidenhammer inquiry group are: Martin Cave (Chairman), John Harley, Michael Hutchings and Jayne Scott.
- For more information on the CMA see our homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn. Sign up to our email alerts to receive updates on mergers cases.
- Enquiries should be directed to Rory Taylor (firstname.lastname@example.org, 020 3738 6798).