The deals watchdog has blocked French bakery giant Cérélia’s acquisition of ready-to-bake pastry brand Jus-Rol following concerns it will push up prices for shoppers and lower product quality.
The Competition & Markets Authority concluded the Jus-Rol business must be sold to an independent buyer, to be approved by the regulator.
It follows an almost year-long probe by the CMA after Cérélia agreed to buy the European dough businesses of General Mills, which includes private label operations in the UK, Ireland and Germany, and the Jus-Rol and Knack & Back brands.
Cérélia said it was “saddened and disappointed” by the outcome and the decision relied on “flawed conclusions”.
The French group plans to appeal and added it stood by its ambition to strengthen the dough-to-bake category through investment and product innovation.
Cérélia also said the CMA’s final report suggested the outcome was largely based on “uncorroborated and unreliable concerns” raised by a very small number of supermarkets.
The business also “strongly rejected” the CMA’s notion that as a result of the acquisition it, and not the supermarkets, would be able to determine the prices of products charged to UK customers.
Cérélia president Guillaume Réveilhac said: “The Jus-Rol brand was acquired from former owner General Mills with big plans to invest and improve the business, and an expectation of a proper and reasonable review by the CMA, supported by similar cases that were rightfully and simply cleared.
“We are deeply disappointed by today’s fundamentally flawed decision. Rather than protecting the interests of UK consumers and the UK economy in these difficult times, the CMA decision blocks much-needed investment into new and exciting affordable products in the UK home baking segment. The decision cannot be rationalised.”
The CMA found items made by Cérélia and Jus-Rol accounted for almost two-thirds of the £100m-a-year ready-to-bake dough category in the UK.
Following a seven-month phase 2 investigation – which came after phase 1 kicked off in February – the CMA said the merger brought together the two leading suppliers in the market by “a considerable margin”.
Evidence from supermarkets given to the CMA showed they consider the companies’ products to be important alternatives to one another. Grocers also told the CMA the ability to trade off Jus-Rol against Cérélia, and vice versa, when buying their products allowed them to get a better deal for their customers.
“As living costs continue to rise, it’s our responsibility to make sure that competition can play its part in delivering the best possible deals for customers,” said Margot Daly, chair of the independent panel of experts conducting the CMA phase 2 investigation.
“Cérélia and Jus-Rol are the biggest players in this market by far and losing the competition that takes place between them could result in customers facing higher prices and worse-quality products.”
Cérélia said it had already made a significant investment in the UK by building a new pastry dough factory in Corby to bring production of the Jus-Rol brand back to the UK and provide local production at competitive prices for UK retailer own brands.
The CMA’s conclusions denied Cérélia the ability to make further investments in a brand that had “lacked relevant support” for many years, it added.
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