Affected market: Wholesale distribution to the food service industry
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The OFT's decision on reference under section 22 given on 29 November 2004
Brake Bros Limited (Brakes) is a distribution company supplying food, drink and other products mainly to the catering (or 'foodservice') industry in the UK and France. It provides delivered wholesale and contract logistical services and has its own manufacturing operation.
Peter's Food Service Limited (Peters) is also active in the wholesale distribution of food to the catering industry. In the last financial year, the UK turnover of Peters' wholesale distribution business was […]. Peters also has a manufacturing operation which makes pies, and a van sales division.
On 17 September 2004 Brakes acquired that part of the Peters business – the wholesale distribution business - specialised in the supply of chilled and fresh food products to larger catering customers. Peters is retaining its van sales division and its pie manufacturing operation, which will continue to compete with Brakes after the merger.
The administrative deadline expires on 2 December 2004.
As a result of this transaction Brakes and Peters' wholesale distribution business have ceased to be distinct. The UK turnover of the acquired business exceeds £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied. The OFT therefore believes that a relevant merger situation has been created.
The parties overlap in the wholesale supply of chilled food to national and local foodservice customers. The merged entity is constrained by competition from the other national players, including 3663, Woodward Foodservice and DBC.
It is also constrained by competition from logistics companies providing contract supply services, such as Exel and Wincanton. Like national wholesalers, these firms have the infrastructure and geographic coverage to compete for national customers.
In addition, national customers have the option of sourcing more of their requirements locally or from regional suppliers.
Third parties were unconcerned by this merger, and none regarded Brakes and Peters as particularly close competitors before the merger.
Consequently, the OFT does not believe that it is or may be the case that the merger has resulted or may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.
This merger will therefore not be referred to the Competition Commission under section 22(1) of the Act.