The CMA has launched a detailed investigation of the merger between European frozen pastry giants Vandemoortele and Délifrance, after it failed to meet the watchdog’s conditions.
Vandemoortele had agreed to sell off two Délifrance pastry factories in France to appease the CMA, but failed to find a buyer in time.
Launching a phase two investigation this week after the resolution period elapsed, the CMA said without the factories’ sale Vandemoortele had become the largest supplier of frozen pastries in the UK “by a considerable margin”.
Both companies supply frozen viennoiserie, such as croissants and pains au chocolat, to supermarket and foodservice customers, who then bake them in-house.
The €2.4bn (£2.1bn) post-merger Vandemoortele “could substantially affect competition in the supply of these products, potentially leading to higher prices or lower quality for customers in the UK”, it said.
While the deal has technically completed, approval by both the CMA and the European Commission was dependent on the sale of the Délifrance sites in Avignon and Béthune.
The CMA also required Vandemoortele to sell Délifrance’s UK laminated dough business.
“At the time, the CMA believed the proposal might resolve its concerns. While the CMA has engaged closely with Vandemoortele to support its delivery of a resolution, Vandemoortele has not put forward a proposed sale,” the watchdog said.
“The deal has now been referred to an in-depth phase two inquiry, which will be led by an independent panel of experts who will investigate the concerns in more detail.”
Vandemoortele employs around 3,500 people across 28 production sites throughout Europe and the US, turning over around €1.4bn annually in its bakery division alone. Previously owned by a farmer co-operative, Délifrance employs more than 3,200 staff, and turns over around €930m selling frozen bakery products in Europe and Asia.
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