The Competition & Markets Authority has launched an investigation into the merger of milk processors Freshways and Medina Dairy amid concerns it could lead to a “substantial lessening of competition”.
The mid-market dairy companies agreed a merger in July last year to create a £400m combined company employing about 1,000 staff.
The CMA said it was investigating the proposed merger in September and this morning had moved to a formal phase one competition investigation.
The body has invited comments from industry participants over whether the deal “may be expected to result in a substantial lessening of competition” in the industry.
The invitation to comment closes on 16 February and the deadline for the CMA to announce its decision whether to refer is 30 March.
The companies had previously announced that the combined Medina Freshways would be led by Medina CEO Sheazad Hussain and Freshways group MD Bali Nijjar as joint MDs.
They said the merger would “create the basis for a viable, long-term, fresh liquid milk business”, the two companies said, and an outfit “with the requisite scale and agility to compete with the two large players which dominate the dairy sector in the UK”.
The news of the merger last summer brought to an end almost two years of speculation around the future of the two processors, which first emerged after the collapse of rival mid-market processor Tomlinsons Dairies into administration in October 2019.
Windsor-based Medina and West London-based Freshways had both endured difficult trading conditions over recent years, leading to low returns that were exacerbated by the closure of the hospitality sector at the start of the first coronavirus lockdown.