The CMA (Competition & Markets Authority) has denied Cérélia’s purchase of Jus-Rol over concerns it may leave UK retailers and shoppers facing "higher prices and lower quality products".
According to a statement from the CMA, Just-Rol is the largest supplier of branded ready-to-bake products in the UK, while Cérélia is the biggest supplier of own-label ready-to-bake products, making these items on behalf of some of the nation’s largest grocery retailers.
The decision to deny the acquisition follows an investigation into the deal after an initial Phase 1 inquiry identified possible competition concerns.
A panel of independent CMA experts has analysed the evidence presented by Cérélia, Jus-Rol, grocery retailers and other industry players in an effort to understand the market and possible impact of the acquisition.
The CMA claims that while there are differences between the companies’ products, Jus-Rol items compete with supermarkets’ own-label products supplied by Cérélia for the same space on many supermarket shelves. The authority also stated that the competition the two do face is limited, with the other suppliers lacking the same capabilities. Moreover, it believes it is unlikely a new supplier would enter, or equally a current one expand, quickly enough to address any loss of competition.
As such, the panel concluded that Jus-Rol should be sold to an independent buyer to maintain competition.
“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,” commented Margot Daly, chair of the independent panel of experts conducting this 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. Today’s decision will ensure that doesn’t happen.”
Cérélia calls out CMA decision to deny Jus-Rol purchase
Cérélia has responded to the decision, which follows the company’s investment into a new Jus-Rol pastry dough factory in Corby, stating it is “saddened and disappointed” with the outcome and will be appealing it.
The bakery producer believes that the evidence upon which the decision was based relies largely on “uncorroborated and unreliable concerns raised by a very small number of supermarkets” and claims these concerns were not echoed by the vast majority of other retailers.
The business also rejects the CMA’s notion that as a result of the acquisition, it – and not the supermarkets – would be able to determine the prices of dough to bake products charged to UK customers.
In response, Cérélia also said it had concerns over the CMA’s understanding of the structure and competitive dynamics of the industry Cérélia operates within
“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,” contended Cérélia president, Guillaume Reveilhac.