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14-13 13 February 2013
The OFT today referred the proposed acquisition by A.G. BARR plc (Barr) of Britvic plc (Britvic) to the Competition Commission for further investigation due to concerns that it could reduce competition between certain brands of these two soft drinks suppliers.
Barr and Britvic are two of the three main players in the UK that offer a wide range of soft drink brands. The other is Coca-Cola Enterprises.
Barr and Britvic supply a range of carbonated and non-carbonated soft drink brands: Barr's brands include Orangina, KA and Rubicon as well as IRN BRU, which has a particularly strong presence in Scotland. Britvic's brands include Robinsons, Fruit Shoot, Tango and Pepsi.
The OFT's investigation found that the acquisition raised competition concerns with respect to the loss of the competitive constraint from some of Britvic's brands on Barr's IRN BRU and Orangina brands.
Consumer survey evidence submitted by the merging parties showed that Coca-Cola and other brands supplied by Coca-Cola Enterprises were important alternative choices for many drinkers of Barr's IRN BRU and Orangina brands. However, it also showed that some of Britvic's brands - in particular Pepsi and Tango - were also sufficiently close alternatives to raise competition concerns. As a result, the OFT could not rule out the possibility of higher prices post-merger.
Amelia Fletcher, OFT Chief Economist and Decision Maker in this case, said:
'The soft drinks industry is an important one for many consumers in Great Britain. People spend over £9 billion each year on these drinks.
'This merger will see the UK market reduce from three to two main players. Our investigation has identified competition concerns relating to this deal with respect to Barr's IRN BRU and Orangina brands which could lead to higher prices for consumers.
'In addition, we could not rule out the possibility of further competition concerns arising from combining the overall Britvic portfolio of soft drinks with the entire Barr portfolio. We are therefore referring the merger to the Competition Commission for an in-depth investigation.'
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