Jus-Rol acquisition: Retailers and shoppers to face higher prices, CMA finds

The Competition and Markets Authority (CMA) has on Friday said the acquisition of Jus-Rol, leading brand in the bake-at-home dough category, by Cérélia Group would ‘substantially lessen’ competition in the dough market.

Following its phase 2 investigation, the competition watchdog said Cérélia’s purchase of Jus-Rol could leave UK retailers and shoppers facing higher prices and lower quality products. UK consumers spend over £100 million each year on ready-to-bake products – including staples such as shortcrust and puff pastry, pizza and patisserie dough products.

Cérélia is the largest manufacturer of bake-at-home dough products in the UK, producing private label (own brand) products on behalf of some of the largest grocery retailers in the UK. Jus-Rol is by far the largest supplier of branded ready-to-bake products in the UK.

General Mills sold its European dough business, including the Jus-Rol brand, to Cérélia in November last year, and the CMA launched an in-depth review into the deal in June this year after an initial Phase 1 investigation identified possible competition concerns.

“Food prices are already increasing, which makes it important that we don’t allow a lack of competition to make the situation worse,” Margot Daly, chair of the independent inquiry group carrying out the Phase 2 investigation, said.

“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.”

The CMA’s investigation has provisionally found that the merger brings together what are the two leading suppliers in the market by a considerable margin. 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, the evidence gathered by the CMA shows that Jus-Rol products compete with grocery retailers’ own-brand products supplied by Cérélia for the same space on many supermarket shelves.

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.