The merger of two soft drinks suppliers could lead to higher prices for consumers, the competitions watchdog has warned.
The Competitions and Markets Authority (CMA) said that the £935 million merger of Refresco, which makes drinks for UK companies including Innocent, Sunny D and Ocean Spray and Cott - which makes the MacB flavoured water in Aberdeenshire, as well as the Old Jamaica ginger beer brand - could push prices higher.
It warned that as there is only one other UK company which supplies juice drinks using a special aseptic production process that allows them to be sold preservative-free and without refrigeration, the combined new business might be able to increase prices or lower quality standards due to a lack of competition.
Rachel Merelie, acting executive director for the CMA and decision maker in this case, said: “These companies supply well-known UK shops and brands with soft drinks, who in turn sell these to thousands of people daily. It is therefore important that we address any issues to ensure that shoppers do not lose out.
“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. This may result in higher prices or quality standards slipping for stores and brands, with potential knock-on effects to end-consumers.”
Dutch firm Refresco, which has its headquarters in Rotterdam, also makes drinks for Del Monte, as well as retailers and wholesalers such as Tesco, Asda, and Morrisons.
Refresco said it would cooperate with the CMA and said it would “offer suitable remedies”.
The company’s chief executive, Hans Roelofs, said: “The initial investigation of the CMA did not find any competition concerns for most of our products. However, they have raised concerns for one specific product category produced by Refresco and Cott.
“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. We continue to cooperate with the CMA in order to progress the acquisition and work towards a successful completion.”
The CMA will now refer the merger for an in-depth investigation unless Refresco offers acceptable undertakings to address competition concerns.