Refresco and Cott merger could lead to higher prices for some juice drinks, says UK competition watchdog

Refresco’s proposed $1.25bn purchase of Cott’s worldwide beverage manufacturing business has already received clearance in the US and Canada but faces concerns from the UK watchdog in the juice sector. 

Special production process​

The CMA’s initial investigation into the merger did not find any competition concerns for the majority of the soft drinks produced. However, it said both companies supply juice drinks using a special production process that allows them to be sold preservative-free and without refrigeration. 

With only one other competitor in the UK supplying third parties with juice drinks using this process, the CMA raised concerns that, after the merger, the combined business might be able to increase prices or lower standards.

The next step is for the CMA to refer the merger for an in-depth investigation unless Refresco offers acceptable undertakings to address competition concerns. 

Rachel Merelie, CMA acting executive director and decision maker in this case, said: “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.”​

Refresco willing to offer suitable remedies​

In response, Refresco said it is currently examining the details of the decision and is willing to offer suitable remedies and will fully cooperate with the CMA to address the concerns raised.

Refresco CEO, Hans Roelofs, said: "With the clearance we received earlier in the process from the US and Canadian regulatory authorities, and the overwhelming support from our shareholders, we are willing to propose remedies to the CMA to address this specific issue and put us on the right track to also obtain clearance in the UK. ​

“We continue to cooperate with the CMA in order to progress the acquisition and work towards a successful completion."​

Refresco is an independent bottler of soft drinks and fruit juices for retailers and A-brands with production in Benelux, Finland, France, Germany, Italy, Poland, Spain, the UK and the US. It realized in 2016 full year volumes and revenue of circa 6.5 billion litres and circa €2.1 billion, respectively. 

Cott is a route based service company with a leading volume-based national presence in the North America and European home and office bottled water delivery industry and a leader in custom coffee roasting, blending of iced tea, and extract solutions for the US foodservice industry.