Britain’s competition watchdog told consumer goods group Unilever and US spice maker McCormick they must address competition concerns in recipe mixes and sauces or face an in-depth investigation of their planned $65 billion food deal.
The Competition and Markets Authority said on Wednesday the companies could offer remedies before a November 18 deadline to avoid a detailed investigation.
An in-depth review can result in a deal being cleared, cleared subject to remedies such as asset sales, or blocked.
Unilever said in March it would combine its food business with Frank’s RedHot and French’s mustard maker McCormick to create a company worth around $65bn in the second-largest food sector deal on record.
McCormick’s UK consumer business includes herbs, spices and sauces sold under the Schwartz brand, while Unilever sells a range of food products including dry sauces and meal mixes under the Knorr, Maille and Colman’s brands.
Following an initial review, the CMA said it was concerned the deal could reduce competition in the supply of dry ingredient mixes, such as chilli con carne mixes, and dry sauces, such as parsley sauce, to UK retailers.
The regulator said Nestle’s Maggi, Premier Foods’ Bisto and supermarket own-brands provide only limited competition in these markets.
“This is an expected step in the regulatory process, and we are working constructively with the CMA on a suitable remedy,” a Unilever spokesperson said. McCormick also said it was working constructively with the CMA.
Unilever is reshaping its portfolio to focus on faster-growing personal care and beauty businesses. It spun off its ice cream business last year.
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