Hain Frozen Foods and Orchard House Foods Competition Merger Inquiry
First published by Author on September 06, 2016 in the following categories: Latest
The CMA (Competition and Markets Authority) is investigating the completed acquisition by Hain Frozen Foods UK Limited of Orchard House Foods Limited.
With any merger and acquisition activity, it’s important to ensure that competition in the market is not lessened through a reduction in the amount of competitors competing in the market. If you only have five or six competitors, and two of them merge, you’re now down to only three of four competing against each other.
Off the back of these business activities, the CMA will usually have a look in to whether there is any cause for concern.
Initial findings
The CMA enquiries are still ongoing, but, so far, they have noted that the merger may result in substantial lessening of competition within the market.
The two companies involved have been found to be the two biggest suppliers of freshly squeezed juice, meaning the merger may literally squeeze out any chance of competition for freshly squeezed juiced products. No other companies are thought to be entering the market to effectively compete, meaning there is the very real problem here that competition for the relevant product has just literally been wiped out!
No competition is a huge problem. With no need to compete, prices can be set at whatever level the company deems fit. At the end of the day, who one earth is going to stop them from doing so when there is no need to compete with anyone?
Competition is what drives innovation and keeps prices low. Without it, the focus for business can often just be about maximising profits as opposed to keeping healthy profit margins through and reducing costs to help compete with lower prices.
What happens now?
Undertakings or agreements may be needed to satisfy the CMA’s concerns about this merger. This could include the business having to sell off the arms of their company that sell the juice to allow competition to return to the market.