The UK's Competition Commission has cleared the proposed merger between Britvic and AG Barr.
The deal between the two drinks manufacturers lapsed when the UK's Office of Fair Trading (OFT) referred it to the Competition Commission, who announced on Tuesday that it found no reason to block such a deal.
Commenting on the merger, Alasdair Smith, the Commission's deputy chairman said, "Most consumers tend to see Barr and Britvic brands as distinct products rather than as close substitutes for each other. Looking at consumer preferences and other evidence, we were able to conclude that the proposed merger was unlikely to substantially lessen competition."
According to the Competition Commission, the body 'did not consider that the increased size of the merged company would mean new entrants and smaller companies would be disadvantaged significantly in obtaining listings at retailers'.
AG Barr welcomed the clearance, commenting that 'the Board of A.G Barr believes that is a significant positive step'. The Irn Bru-maker stated that it would 'continue to work closely with the Competition Commission throughout the remainder of the inquiry, with a view to reconsidering a merger'.
Britvic, however, seemed a little more aloof on the proposed deal, stating that it would have to consider its next move in light of its new situation since the merger was agreed.
Since then, Britvic has radically overhauled its operations, announcing plans to lay off more than 10% of its workforce in the UK under a £30 million cost-saving plan, which was announced in late May of this year. The Robinsons manufacturer also posted a 36% increase in half-year profits under its new chief executive Simon Litherland.
Throwing doubt on the proposed merger, Britvic chairman Gerald Corbett said, "Our company is in a different place to last summer when the terms of the merger were agreed. The cost savings from merging are less, we are performing better, we have new management and we have a new strategy to deliver good growth internationally as well as in the UK."
The Competition Commission is expected to publish its final report by 30 July 2013, the statutory deadline for completion of its inquiry. No merger can be formally agreed prior to this date. (13 June)
© 2013 - ESM: European Supermarket Magazine by Ellen Lunney
