Corby pastry and dough company merger could leave shoppers facing price hikes, official watchdog finds

The purchase by a Corby-based company of a rival pastry manufacturer could could lead to higher prices for shoppers, according to a competitions watchdog.

BakeAway owners Cérélia – with a factory off Phoenix Parkway – makes ready-to-bake doughs including pastry, pizza, cookie, brownie and gingerbread and struck a deal with rival home-baking brand Jus-Rol last year.

But according to the Competition and Markets Authority (CMA) the merger could significantly reduce competition in the market, leading to higher prices in supermarkets.

Margot Daly, chair of the independent inquiry group carrying out the investigation, said: “Food prices are already increasing, which makes it important that we don’t allow a lack of competition to make the situation worse.

“Jus-Rol and Cérélia are by far the largest suppliers in the ready-to-bake sector and the competition that takes place between them helps grocers to give shoppers the best possible deals.

“Today’s decision is provisional, and we will now consult on our findings and listen to any further views before reaching a final decision.”

UK consumers spend over £100 million each year on these ready-to-bake products – including staples such as shortcrust and puff pastry, pizza and patisserie dough.

Jus-Rol is by far the largest supplier of branded ready-to-bake products in the UK, while Cérélia is the largest supplier of own-brand ready-to-bake products, making these items on behalf of some of the nation’s largest shops.

The CMA launched an in-depth review into the deal in June 2022 after an initial phase one investigation identified possible competition concerns.

Over the past five months, an independent CMA panel analysed a wide range of evidence in order to fully understand the market, as well as the potential impact of the deal.

Ready-to-bake items supplied by Cérélia and Jus-Rol account for nearly two-thirds of all such products sold in the UK.

While there are differences between the companies’ products, CMA say the evidence gathered shows that Jus-Rol products compete with grocery retailers’ own-brand products supplied by Cérélia for the same space on many supermarket shelves.

They added that evidence from grocery retailers shows that they consider the companies’ products to be important alternatives to one another – in particular because there are few alternative suppliers of either branded or own-brand products. Grocery retailers also told the CMA that their ability to trade off Jus-Rol and Cérélia when purchasing these products enables them to get a better deal for customers.

The CMA’s investigation provisionally found that the two businesses face very limited competition, with all other suppliers being far smaller, and many lacking the capabilities held by the merging businesses. The CMA also provisionally found it is unlikely that any supplier would enter the market, or expand its existing activities, to address the loss of competition brought about by the deal.

On this basis, the CMA has provisionally concluded that the deal would ‘substantially lessen competition’, and risk UK grocers facing higher prices.

The CMA will be consider submissions by interested parties ahead of issuing its final report, due by January 24, 2023.