CMA accepts remedies in Vandemoortele Délifrance deal

The Competition and Markets Authority has accepted final undertakings in its investigation of Vandemoortele’s acquisition of Délifrance, concluding the merger reference after almost a year of regulatory scrutiny.

The CMA confirmed on 6 October that the undertakings had been accepted and the reference was fully determined. The investigation focused on competition in the supply of frozen laminated dough products to UK retail and foodservice customers.

Vandemoortele previously conceded that the completed acquisition could be expected to result in a substantial lessening of competition in that market. The regulator accepted the concession in May and continued the investigation to determine what remedy should follow.

The case entered an in-depth Phase 2 investigation in April after the CMA decided not to accept an earlier set of proposed undertakings instead of making a reference. An interim report followed in June, with the final report published in August.

Draft undertakings were then put out for consultation in September before the final measures were accepted this month.

The process demonstrates the extent of the CMA’s powers over completed acquisitions. A buyer can take ownership of a business and still face restrictions, disposal requirements or other remedies if the regulator later concludes that competition has been weakened.

Food manufacturing transactions can attract close scrutiny where consolidation reduces the number of suppliers available to large retailers or foodservice customers. The size of the companies involved is only one factor. Competition concerns can arise inside relatively narrow product categories where buyers have limited substitutes.

The Vandemoortele investigation centred on frozen laminated dough rather than the companies’ wider bakery operations. That narrower market was sufficient for the CMA to conclude that the acquisition created a competition problem requiring intervention.

Merger reviews of this kind also create operational costs beyond legal and advisory fees. Integration decisions may be delayed, management attention remains tied to the regulatory process and assets can be subject to restrictions while a remedy is negotiated.

Those risks are particularly relevant to buyers pursuing acquisitions in concentrated markets. Remedy requirements can affect the economics of a transaction after a price has already been agreed and, in completed deals, after ownership has transferred.

Acceptance of the final undertakings gives Vandemoortele greater certainty over the conditions attached to the Délifrance acquisition and brings the formal reference to an end at the statutory deadline.