Egg giant Noble Foods has vowed to fight a ruling that could see it split up by the competition watchdog.
Formed in the merger between Stonegate and Deans Foods on 23 June, Noble Foods has been under investigation by the Competition Commission since July 2006. It supplies more than half the eggs sold in supermarkets and a majority of the liquid egg used in catering and food manufacturing.
Its size is worrying inquiry chairman Barbara Mills, who said the company could be forced to sell part of its business and slim down.
In a provisional ruling, she said retailers could have problems finding an alternative egg supplier because Noble's competitors are too small to provide the required volume of eggs. "We think it is likely the merged company would be able to increase prices to its customers, knowing that many would be unable to respond by buying from another supplier," she said. "Price rises could feed through to the consumer."
Others in the industry were reluctant to comment. But Noble could drive a better deal for producers, who are still facing rock-bottom prices. A growing number of retailers have started sourcing free-range eggs in Europe because producers in the UK lack the funding to invest in more production.
But supermarket buyers will be relieved they are not forced to buy from a single supplier. The commission has suggested Noble Foods could resolve the situation by divesting a part of the business but Noble plans to oppose any such move.
"We do not accept that divestment is an appropriate remedy," said Michael Kent, CEO of Deans Foods. "We will be challenging the findings and working towards a more satisfactory outcome." Interested parties have until 19 January to say what should happen to Noble. A ruling is expected in mid-February.
Formed in the merger between Stonegate and Deans Foods on 23 June, Noble Foods has been under investigation by the Competition Commission since July 2006. It supplies more than half the eggs sold in supermarkets and a majority of the liquid egg used in catering and food manufacturing.
Its size is worrying inquiry chairman Barbara Mills, who said the company could be forced to sell part of its business and slim down.
In a provisional ruling, she said retailers could have problems finding an alternative egg supplier because Noble's competitors are too small to provide the required volume of eggs. "We think it is likely the merged company would be able to increase prices to its customers, knowing that many would be unable to respond by buying from another supplier," she said. "Price rises could feed through to the consumer."
Others in the industry were reluctant to comment. But Noble could drive a better deal for producers, who are still facing rock-bottom prices. A growing number of retailers have started sourcing free-range eggs in Europe because producers in the UK lack the funding to invest in more production.
But supermarket buyers will be relieved they are not forced to buy from a single supplier. The commission has suggested Noble Foods could resolve the situation by divesting a part of the business but Noble plans to oppose any such move.
"We do not accept that divestment is an appropriate remedy," said Michael Kent, CEO of Deans Foods. "We will be challenging the findings and working towards a more satisfactory outcome." Interested parties have until 19 January to say what should happen to Noble. A ruling is expected in mid-February.
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