Refresco-Cott Merger Faces CMA Investigation
Netherlands-based drinks bottler Refresco is facing an in-depth investigation from the UK's Competition and Markets Authority (CMA) regarding its $1.25 billion acquisition of Cott's bottling activities.
The CMA says that although its initial investigation into the merger did not raise any concerns for the majority of products, it sees potential competition issues in the juice category.
Both companies supply juice drinks using an aseptic production process that allows them to be sold preservative-free and without refrigeration, however, only one other competitor in the UK currently supplies third parties using this process.
"We have looked at all aspects of this merger and have concerns that the merger could lead to reduced competition in the manufacturing and packaging of certain juice drinks," said Rachel Merelie, the CMA's acting executive director.
"This may result in higher prices or quality standards slipping for stores and brands, with potential knock-on effects to end consumers," Merelie continued.
As a result, the CMA is now referring the soft-drinks merger for an in-depth investigation, unless Refresco offers acceptable undertakings to address these competition concerns.
"These companies supply well-known UK shops and brands with soft drinks, who, in turn, sell these to thousands of people daily," added Merelie. "It is therefore important that we address any issues to ensure that shoppers do not lose out."
Hans Roelofs, CEO of Refresco, says that the company is cooperating with the CMA in order to progress this acquisition and work towards a successful completion.
"With the clearance we received earlier in the process, from the US and Canadian regulatory authorities, and the overwhelming support from our shareholders, we are willing to propose remedies to the CMA to address this specific issue and put us on the right track to also obtain clearance in the UK," Roelofs said.
In October, Refresco agreed to a €1.6 billion takeover by a consortium of PAI Partners and British Columbia Investment Management Corporation.
This deal would also include Refresco's potential acquisition of Cott's, which had originally been expected to be completed by the end of 2017.
In November, the bottling group posted revenue of €583 million in the third quarter of the year, despite challenging market conditions.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.