The Competition and Markets Authority (CMA) has provisionally identified competition concerns in Northern Ireland following Associated British Foods’ (ABF) planned acquisition of Hovis, while finding no such issues in Great Britain.
In its interim report published on 26 March, the CMA said the deal could lead to a substantial lessening of competition in the supply of bread and certain bakery products in Northern Ireland.
However, the regulator provisionally concluded that the merger is unlikely to raise competition concerns in Great Britain, largely due to the expected exit of ABF’s bakery arm, Allied Bakeries, from the market if the deal does not proceed.
ABF, which owns Allied Bakeries and the Kingsmill brand, agreed to acquire Hovis from private equity firm Endless LLP in August 2025, with the aim of creating a more sustainable and profitable UK bread business.
The inquiry found that in Northern Ireland the combined business would bring together two of the largest suppliers, accounting for a significant share of bread and key bakery categories such as pancakes, soda farls and potato farls. Rival suppliers were seen as having limited scale and reach.
By contrast, in Great Britain, the CMA said Allied Bakeries (AB) is likely to exit the market regardless of whether the merger proceeds, meaning competition would be reduced in either scenario. The authority found no realistic alternative buyer for the business that would maintain competition at a national level.
Highlighting the pressures facing the sector, the CMA noted: “AB and Hovis have each faced financial challenges, with AB making significant losses over the last 14 years due to the overall decline in demand for bread, the increase in demand for lower margin private label products and significant increases in costs such as energy, wheat and distribution costs. AB’s parent company, ABF, funded these losses while various restructuring initiatives were pursued to try to address AB’s financial position.”
It also pointed to regional differences in performance, stating: “AB’s NI business is operated to a large extent independently of the GB business, having its own manufacturing and distribution facilities and, unlike the business in GB, is profitable.”
The CMA noted that bread remains a key “known value item” for retailers, making pricing highly sensitive for shoppers.
The regulator is now inviting submissions from interested parties by 16 April before reaching a final decision. It has also asked the companies to indicate whether they intend to propose remedies to address the concerns identified in Northern Ireland.