French food giant Cérélia says it will fight a ruling by the Competition and Markets Authority CMA that it must sell the Jus-Rol business.
The CMA has concluded the merger of the two had potential to restrict competition in the market and lead to higher prices and lower quality products.
Ready-to-bake pastry maker Cérélia – which has its UK arm BakeAway, based in Corby – struck a deal with rival home baking brand Jus-Rol in 2021.
However the CMA said the deal cuts competition and could see supermarkets paying more for potentially lower quality products.
It has now published its final decision, saying Jus-Rol should be sold off to an independent buyer, which it would also need to give its approval for. Management at Cérélia said they believed the decision to deny Jus-Rol acquisition was wrong.
They said they disagreed that prices would go up and quality would suffer and accused the watchdog of having a “serious lack of understanding of the dough-to-bake category”.
Cérélia said it will now appeal the CMA’s decision.
The CMA said UK shoppers spend £100 million a year on ready-to-bake products such as shortcrust and puff pastry, pizza and patisserie dough, with Jus-Rol the biggest branded supplier.
It said Cérélia was the biggest supplier of own-label ready-to-bake products to some of the nation’s biggest grocery stores.
It said because the two compete with one another and there were few alternative suppliers, supermarkets could haggle between the two to get good deals. That was threatened, it said, by the merger.
Margot Daly, chair of the independent panel of experts conducting latest part of the investigation, said: “As living costs continue to rise, it’s our responsibility to make sure that competition can play its part in delivering the best possible deals for customers.
“Cérélia and Jus-Rol are the biggest players in this market by far and losing the competition that takes place between them could result in customers facing higher prices and worse quality products.
“Today’s decision will ensure that doesn’t happen.”
In a statement Cérélia said it was “saddened and disappointed” with the outcome, and stood by its ambition to “strengthen the dough-to-bake category through investment and product innovation, bringing more choice and inspiration to UK customers”.
It said the CMA outcome was “largely based on uncorroborated and unreliable concerns raised by a very small number of supermarkets”.
It said supermarkets would still be able to determine prices and even said the CMA had shown a “persistent lack of understanding of the structure and competitive dynamics of the industry”.
The business said it had already made a big investment in the UK by building a new pastry dough factory in Corby to bring production of the Jus-Rol brand back to the UK and provide local production at what it said were competitive prices for UK retailer own brands.
It said the CMA’s conclusions were denying it the ability to make further investments in a brand that has lacked relevant support for many years.
