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Merger of Heinz and HP Foods referred to Competition Commission

200/05    26 October 2005

The OFT today referred the completed acquisition by Heinz of the HP Foods Group to the Competition Commission (CC).

The OFT has decided that the test for reference is met in relation to the supply of tomato ketchup and brown sauce, barbecue sauce and tinned baked bean and pasta products to retail customers.

Vincent Smith, Director of Competition Enforcement at the OFT, said:

'This transaction brings together two of the largest branded sauce suppliers in the UK who compete in a number of product categories.  As a result of the merger, retail customers and consumers could  suffer from less competition resulting in higher prices for products such as HP brown sauce, tomato ketchup and baked beans.'

The OFT has asked the CC to explore these concerns.

The CC is expected to report by 11 April 2006.

NOTES

1. The Reference Test - The OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

2. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

3. The CC may extend the 24 week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

4. The text of the decision is available from the Mergers section of this website.

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