Kerry Foods’ acquisition of Headland Foods has been referred to the Competition Commission, after retailers complained of post-merger price hikes on frozen ready meals.

The Office of Fair Trading made its decision following the completed merger in January of Kerry and Headland – by far the two largest suppliers of frozen ready meals to UK supermarkets.

Significant price rises after the completed acquisition - as reported by The Grocer in January - gave the OFT cause for concern, according to the watchdog’s chief economist, Amelia Fletcher.

“The merged company’s large share in the frozen ready meals market compared with that of its competitors corroborated that concern, as did the strength of complaints from retail customers,” the body said today.

The post-merger rises could be explained in part by increases in raw material costs, the OFT admitted. But it said the balance of evidence supported retailers’ concerns.

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Three hundred jobs go as Kerry confirms Headland closure (17 February 2011)
Kerry Group accused of pushing up prices after acquiring rival (31 January 2011)
Hot Topic: How come Kerry is keeping so quiet about its acquisition of Headland? (29 January 2011)