The UK’s antitrust regulator has raised concerns regarding the proposed acquisition of Délifrance by Belgium’s Vandemoortele, indicating that the merger could negatively impact competition within the food and beverage industry.
Following a preliminary “Phase 1” investigation, the Competition and Markets Authority (CMA) reported that the merger poses “a realistic prospect of a substantial lessening of competition.” This assessment could have significant implications for the food and drink business landscape in the UK.
Vandemoortele announced its intent to acquire Délifrance in March, claiming the merger would establish a €2.4 billion (approximately $2.6 billion) group that would provide enhanced solutions for retail and foodservice partners.
On December 8, the CMA elaborated on its findings, particularly regarding the potential consequences for the supply of frozen laminated dough products in the UK. The regulator reviewed extensive evidence, including internal documents and feedback from third parties. It ultimately concluded that Vandemoortele and Délifrance are “close” competitors. The CMA noted that the combined entity would become the “largest” supplier of frozen laminated dough products in the UK by a significant margin.
While the CMA acknowledged that a wider range of competitors exists primarily in continental Europe, it also asserted that this broader competitor set may not sufficiently mitigate competitive concerns within the UK market post-merger.
Unless Vandemoortele and Délifrance present adequate remedies to address these competition issues by December 15, the CMA is likely to escalate the review to a more comprehensive “Phase 2” investigation.
In response, Vandemoortele stated to Just Food, “Vandemoortele confirms that it is currently engaged in constructive discussions with the CMA in the context of its ongoing review of the proposed transaction.” The company emphasized that the CMA’s preliminary concerns are a standard part of assessments for mergers.
Additionally, the CMA explored other overlapping product areas such as frozen bread, frozen patisserie, and frozen savoury snacks. In these categories, it determined that the two companies have “limited overlap” in the UK, with “sufficient competition” remaining.
Earlier this month, the European Commission began evaluating specific concessions proposed by Vandemoortele related to the acquisition. Documents indicate that the Commission was notified of the deal in October, although the acquisition was initially announced by Vandemoortele in March.
Vandemoortele operates 32 manufacturing facilities and employs over 4,000 workers, generating an estimated turnover of €1.4 billion from its bakery products business. Meanwhile, Délifrance, a subsidiary of the French grain cooperative Vivescia, reported a turnover of approximately €930 million for the year ending in June, operating 14 production sites and employing around 3,450 staff while serving retail and out-of-home customers across Europe and Asia.
In February, Vandemoortele expanded its footprint by acquiring Italian frozen bakery producer Lizzi and subsequently added Bunge’s European margarine and spreads business the following month.
As the food and drink consumer trends evolve, it will be crucial for stakeholders to monitor developments from the CMA and European Commission concerning this significant merger in the food and beverage industry.
