Dairy Crest Sale: No Approval Yet

The Competition and Markets Authority (CMA) has ruled that Muller’s proposed acquisition of Dairy Crest’s Dairy (i.e. liquid milk) division will be referred for an in-depth investigation unless the businesses can offer undertakings that will resolve the CMA’s concerns.  The two companies account for nearly half of the fresh milk consumed in the UK and in some regions are the only suppliers of fresh milk to the large supermarkets.  The CMA has found that the proposed acquisition has a realistic chance of reducing the competition in the supply of fresh milk resulting in higher prices for retailers and consumers. 

Muller and Dairy Crest have until 19^th June to offer undertakings that may resolve the CMA’ concerns.  If no offers are made by this date or they are not accepted, the CMA will refer the merger for a ‘stage two’ investigation by 26^th June.  This decision is not unexpected given the consolidation it will produce in the liquid milk sector.  The fuller investigation does mean that it will be another six months before it is known whether the sale can go ahead.  Most commentators believe that the sale will be approved eventually.  The CMA may impose some conditions on the sale (e.g. divestment of some dairies).  If these are too onerous the commercial logic of the deal breaks down and it is not inconceivable that Muller could walk away.