The Competition Commission has given the provisional green light for Kerry Foods to complete its acquisition of Headland Foods, but on grounds that are unlikely to leave Kerry smiling with joy.

The commission said it was approving the deal on the basis that it would not significantly reduce competition - as the very retail customers whose complaints sparked the investigation could find better deals elsewhere. 

The Grocer exclusively revealed details of the deal in January when retailers complained Kerry was demanding price hikes of up to 30%. Although Kerry blamed the increases on rising costs and denied any connection with Headland's purchase, the OFT referred the deal to the commission in July. 

However, some retailers were not prepared to wait for the commission ruling and have since sought better terms elsewhere. This demonstrated there were alternatives to the newly-merged company, said the commission, which concluded that the deal "does not give rise to a substantial lessening of competition" and that "Kerry's ability to charge higher prices is unlikely to persist beyond the short term".

The Grocer can also reveal Iceland was among the retailers to find alternative supply. "We have moved a significant amount of business in order to maintain our value to our customers," said Iceland Foods buying director Nigel Broadhurst."

As the number one player in frozen prepared meals, our volume is clearly of interest to many suppliers. We will not sit by and let big food manufacturers dictate where our selling price to our customers should be." 

Interested parties now have until 15 November to supply any further evidence that could persuade the commission to reconsider. However, a spokeswoman said it was highly unlikely any such evidence would be forthcoming. 

"We welcome the preliminary findings and we will continue to cooperate with the commission," said a Kerry Foods spokesman.