Unilever and McCormick have been given until 18 November to address competition concerns over their proposed $65bn food-business combination or face an in-depth investigation by the UK’s competition regulator.
The Competition and Markets Authority has concluded that the transaction could substantially reduce competition in the supply of dry ingredient mixes and dry sauces to British retailers.
The findings follow a phase-one investigation into McCormick’s proposed acquisition of the majority of Unilever’s global foods business.
The deal would combine Unilever brands including Knorr, Colman’s, and Maille with McCormick’s portfolio, which includes Schwartz, French’s, and Frank’s RedHot.
Although the merger would create a major international food company, the regulator’s concerns focus on relatively narrow categories within the British grocery market.
Products examined include dry ingredient mixes for dishes such as chilli con carne and dry sauces including parsley sauce.
The CMA found that the combined business would account for a particularly large proportion of branded sales in these categories, potentially reducing the competitive pressure between suppliers.
Alternative products from manufacturers including Nestlé and Premier Foods, alongside supermarket own-label ranges, were not considered sufficient to eliminate the regulator’s concerns.
The CMA also examined mustard products but concluded that competition was less likely to be affected because English, French, and American mustard styles serve distinct customer preferences.
Companies have one week to propose remedies —
The companies now have an opportunity to offer undertakings intended to address the competition concerns without proceeding to a full phase-two investigation.
Such remedies could include the disposal of individual brands or business operations where that would preserve competition in the affected markets.
If the CMA does not receive acceptable commitments, the transaction will be referred for a more detailed investigation into its potential impact on UK competition.
A phase-two review can result in unconditional clearance, approval subject to remedies, or a decision preventing a transaction from proceeding.
Unilever has already begun exploring the disposal of its Colman’s brand and associated assets, a process it identified earlier this year as part of its response to potential regulatory concerns.
However, the CMA’s findings on dry ingredient mixes and sauces mean that any proposed remedy must address the specific competitive effects identified in those markets.
A Unilever spokesperson said the company was working constructively with the authority and that discussions with potential buyers of Colman’s assets were progressing.
McCormick has also confirmed that it is cooperating with the regulator as the companies continue seeking the approvals required to complete the deal.
The proposed combination was announced in March and is intended to create a food group with substantially greater international scale.
The companies have already progressed through significant regulatory processes outside Britain, including a key stage of US competition review.
Nevertheless, approval in one jurisdiction does not remove the need to satisfy merger control requirements elsewhere, particularly where national regulators identify concerns about competition in specific local markets.
The transaction remains subject to outstanding approvals and other completion conditions. The next UK decision will depend on whether the companies submit remedies that the CMA considers sufficient before the 18 November deadline.
