Pork Farms Group Limited, through the Pork Farms Caspian Limited subsidiary, and Kerry Foods Limited’s chilled savoury pastry (CSP) business both manufacture and supply branded and own-label CSP products to customers such as supermarkets, convenience stores and wholesalers. CSP products include cold pies (such as pork pies), sausage rolls, pasties, slices, hot pies, quiches and scotch eggs, and are worth approximately £1 billion a year.
The merger was referred for an in-depth investigation in January 2015, to be carried out by an inquiry group of Competition and Markets Authority (CMA) independent panel members. In its provisional findings, published today, the CMA has provisionally concluded that the merger has not resulted, and may not be expected to result, in a substantial lessening of competition, and hence higher prices or lower quality for retailers or consumers for the products affected by the merger: hot pies, cold pies, sausage rolls, and pasties and slices.
John Wotton, Chair of the Pork Farms Caspian/Kerry Foods merger group, said:
Looking across the different CSP categories, we have provisionally concluded that the merger will not give the parties an opportunity to raise prices or reduce quality. The evidence we heard indicated that the merger would not significantly affect customers’ ability to negotiate for the best deal for these products.
If necessary, customers such as retailers and wholesalers could switch to available alternative suppliers and we found that there was sufficient capacity, either currently available or which could be quickly brought into play, to allow customers to switch suppliers. As retailers have a degree of bargaining power, and the ability to encourage entry and expansion by alternative suppliers, and they compete closely with their rivals on price, it seems unlikely that the merged company would be able to force price rises on their customers and thus, indirectly, on consumers.
Given the size of the sector and the popularity of these products, the fact that 2 of the largest suppliers had merged meant it was important for us to have the chance to examine in detail the possible effects on retailers and, by extension, consumers. However, on the basis of the evidence we have seen, we do not think either retailers or consumers will lose out from the merger.
The provisional findings report is available on the case page along with all other information related to the inquiry.
The inquiry group must publish its final decision by 21 June 2015.
Anyone wishing to respond to the provisional findings should do so in writing, by no later than 5pm on 11 May 2015, to PorkFarms.Kerry@cma.gsi.gov.uk or write to:
Pork Farms Caspian/Kerry Foods 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.
- Under the Act a relevant merger situation is created if 2 or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million (‘the turnover test’) or as a result of the transaction, in relation to the supply of goods or services of any description, at least a 25% share of supply in the UK (or a substantial part thereof) is created or enhanced (‘the share of supply test’).
- 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 Pork Farms Caspian/Kerry Foods merger inquiry Group are: John Wotton (Chair), Robin Aaronson, John Krumins, and Anne Lambert.
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