Concern over price hike sparks probe into Kerry Group takeover
Published 13/07/2011 | 05:00
Kerry Group was last night accused of hiking prices unfairly, after the UK's Office of Fair Trading (OFT) referred its takeover of Headland Foods for further investigation.
The OFT said it had asked the Competition Commission to investigate the deal after the two companies' major customers said they were "concerned about the significant price rise that followed the merger, and the lack of alternative manufacturers capable of supplying large volumes and wide ranges of frozen ready meals".
Kerry took over frozen food supplier, Headland, in January.
In a statement, the OFT said that part of the price rise, after the merger, could be explained by substantial increases in raw material costs but "the OFT nevertheless concluded that the balance of evidence supported the concerns expressed by customers". Kerry Group expressed surprise at the OFT's move.
"The deal involved extensive discussions by all parties concerned, and there was intense competition in the sector before and after we completed the acquisition.
"Like all companies in the sector, Kerry Group has had to deal with higher input costs and they have been passed on where appropriate," it said. "We don't see any issue with the business."
Kerry closed up 1.83pc at €29.