It has been a busy start to the year for the Competition and Markets Authority's (CMA) merger control teams, with the CMA identifying possible concerns arising from no less than four deals in January.
Three of these have been referred to Phase 2 for in-depth review, whilst the fourth was cleared subject to a divestment remedy.
The CMA's recent workload has covered a typically diverse range of industries (including lubricants, pork pies, food cans and magazines). As usual, some of the deals under review are conditional on merger control clearance, but others have already completed (meaning that they have come to the CMA's attention through its market intelligence function and/or third parties' comments).
Highlights from the month include:
- Lubricants merger referred to Phase 2
The CMA has raised initial concerns regarding the proposed acquisition of the K-Y brand by Reckitt Benckiser (which owns the Durex brand). The merged business would become the largest supplier of personal lubricants to grocery retailers and national pharmacy chains in the UK. The CMA has launched a Phase 2 investigation lasting 24 weeks.
- Pork pies merger referred to Phase 2
The CMA has referred Pork Farms Caspian Limited's acquisition of Kerry Foods' chilled savoury pastry business for a Phase 2 investigation. The products in question are pork pies, sausage rolls, pasties and slices, quiches, scotch eggs and the like.
Typical of its approach in other cases, the CMA has looked at the markets with a high degree of granularity. As well as distinguishing between different product types, it has also looked separately at branded and own-label products, and different retail channels (such as supermarkets vs convenience stores).
Interestingly, for some of the products in question, it appears that the merged entity will not be the largest supplier in the market. But the CMA is concerned because there will only be one or two other large suppliers in the market.
The CMA now has until 21 June to decide on the merger. The deal completed back in August 2014 and the parties will be required to continue to 'hold separate' the two businesses pending the outcome of the investigation.
- Food cans merger referred to Phase 2
The CMA has referred Sonoco Products Company's completed acquisition of Weidenhammer Packaging Group for an in-depth Phase 2 review. Both parties manufacture and supply composite cans for food products (such as gravy granules, chocolate powder, crisps, crackers and coffee). Following the transaction, there remain only three suppliers of such products in the UK.
Sonoco had offered remedies to address the CMA's initial concerns, but the CMA rejected these as not sufficiently clear-cut.
- Magazines merger cleared subject to divestments
The CMA has cleared the acquisition by Immediate Media of 19 magazine titles from Future Publishing, subject to Immediate selling three titles to a buyer approved by the CMA.
Back in October, following an initial review of the transaction, the CMA expressed concerns that the transaction would give Immediate Media too strong a position for the supply of needlecraft magazines and for genealogy magazines. It accepted Immediate Media's offer to address its concerns by divesting three titles (Your Family Tree, Cross Stitcher and Cross Stitch Collection). Immediate Media may retain the remaining 16 titles that it acquired, since these do not raise competition concerns.
- Divestments proposed in petrol station deal
The CMA is consulting on an offer by Motor Fuels Limited to divest a petrol station on Kent, to address local market competition concerns arising from its acquisition of 228 petrol stations from Murco. Assuming that the CMA accepts the remedy, the transaction will be cleared in Phase 1.
Meanwhile, the CMA opened investigations into a further five transactions in January, namely:
CVC/Sky Bet (betting), Perrigo/Omega Pharma Invest (pharmaceuticals), ZOLL Circulation/Philips InnerCool (medical equipment), Multi Packaging Solutions/Presentation Products (printing and packaging) and esure/Gocompare (financial services). The CMA currently has a total of 35 open merger control cases on its hands.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.