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UK competition watchdog raises concerns over Refresco’s $1.25bn deal with Cott

The UK Competition and Markets Authority (CMA) has found that Refresco’s proposed acquisition of Canada-based Cott’s bottling activities for $1.25bn could lead to higher prices or lower quality standards.

In July 2017, soft drinks and fruit juices bottler Refresco agreed to acquire Cott's bottling activities including Cott’s traditional beverage manufacturing business (Cott Beverages) and the company’s North America, UK, and Mexico businesses.

The acquisition includes all the hot fill and cold fill activities, across all categories: carbonated soft drinks, juices and juice drinks, sparkling waters, mixers and others.

Following an initial investigation into the proposed deal, the UK’s competition authority did now find any competition concerns for the majority of its products.

The two companies supply juice drinks using a special aseptic production process, allowing them to sell the products preservative-free and without refrigeration.

The CMA, however, said it is concerned that the merger might increase prices or lower quality standards as there is only one other competitor in the country which currently supplies juice drinks to the third parties using special aseptic production process.

CMA acting executive director Rachel Merelie said: “These companies supply well-known UK shops and brands with soft drinks, who in turn sell these to thousands of people daily. It is therefore important that we address any issues to ensure that shoppers do not lose out.

“We have looked at all aspects of this merger and have concerns that the merger could lead to reduced competition in the manufacturing and packaging of certain juice drinks.

“This may result in higher prices or quality standards slipping for stores and brands, with potential knock-on effects to end consumers.”

The two companies said they would propose remedies to the CMA in order to address the concerns and secure clearance for the proposed deal.

Image: Refresco headquarters. Photo: courtesy of Refresco / Richard Sinon.