Premier Foods Regulatory News (PFD)

The OFT has today accepted undertakings offered by Princes Limited (Princes) to address the competition concerns arising from its completed acquisition of the canning business of Premier Foods Group Limited (Premier).

As a result, the merger will not be referred to the Competition Commission.

Under the terms of the undertakings, the Fray Bentos brand and its manufacturing assets will be sold to Baxters Food Group Limited (Baxters) to resolve competition concerns raised by the merger.

The OFT carefully assessed and consulted publicly on the proposed undertakings, as well as on the suitability of Baxters as a purchaser of the Fray Bentos brand.

Amelia Fletcher, Chief Economist at the OFT and Decision Maker in this case, said:

'This merger would have led to a near monopoly in the provision of canned pies in the UK. However, the sale of the Fray Bentos brand to Baxters will restore pre-merger levels of competition for the benefit of consumers. The OFT believes that Baxters, with its extensive experience in the sector, is a suitable purchaser for the business.'

NOTES

1. Download a copy of the undertakings.

2. The Reference Test - The OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that a relevant merger situation has been created; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

3. Under the Enterprise Act 2002 a relevant merger situation is created if two 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; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25% share of supply in the UK (or a substantial part thereof) is created or enhanced.

4. Under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. In doing so, the OFT will have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.

5. Upfront buyer - the OFT considered in this case that a necessary requirement to suspend the duty to refer and consider undertakings was that Princes identify an upfront buyer for the Fray Bentos brand. A provisional sale to that buyer needed to be agreed before the OFT accepted the undertakings. This means that the OFT was able to consult publicly on the suitability of Baxters as the proposed purchaser during the public consultation period. Before accepting the undertakings the OFT gave notice of the proposed undertakings under Schedule 10 of the Enterprise Act 2002.

7. The full text of this decision will appear in the mergers section at a later date.

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