The UK competition watchdog says it will refer the $1.25bn takeover of Cott of Canada by Netherlands-based drinks bottler Refresco to a full investigation after an initial probe established the deal could lead to higher prices for some supermarkets and household brands.
The Competition and Markets Authority said it had looked at all aspects of the merger and had “concerns that the merger would lead to reduced competition”.
Rachel Merelie, the CMA acting executive director, said:
These companies supply well-known UK shops and brands with soft drinks, who in turn sell to thousands of people daily. It is therefore important that we address any issues to ensure that shoppers do not lose out.
The CMA said it would now refer the merger to an in-depth investigation unless Refresco offers acceptable undertakings to address competition concerns.
Refresco announced in July last year it was buying Cott, a Canada-based company, which also has plants in the US, Mexico and the UK.
At the time, Refresco chief executive Hans Roelofs said the deal would create “the world’s largest independent bottler” with combined production of 12bn litres, a quarter of which would come from Cott.
However the CMA said the merger would lead to reduced competition in the manufacturing and packaging of certain juice drinks, which may result in higher prices or quality standards slipping for stores and brands, with potential knock-on effects to end-consumers.