Unilever-McCormick deal may harm competition in dry ingredients market, says CMA

The merger of Unilever’s food business with US rival McCormick could lead to less competition in the market for dry ingredient and sauce mixes, according to the UK watchdog.

The Competition and Markets Authority (CMA) is looking into the £33.8 billion tie-up which was announced in March.

UK-based consumer goods giant Unilever has brands like Knorr, Maille and Colman’s as part of its food division, while McCormick’s owns Schwartz and French’s in the UK.

The CMA found that the merger will create the biggest supplier of dry ingredient mixes, for meals such as chilli con carne, and dry sauce mixes such as parsley sauce, in the UK market “by far”.

It identified competitors such as seasoning mix brand Maggi and dry sauce brand Bisto but said these products “impose only a limited constraint” on the merged food group.

Unilever owns brands including Colman’s (Nick Ansell/PA)

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It also looked at potential competition concerns over the supply of mustard to UK supermarkets, with Unilever owning labels Colman’s and Maille, while McCormick owns French’s.

However, it found that consumers typically consider English, French and American style mustards as distinct from one another and therefore supermarkets tend to stock each different type.

This means there is limited overlap between Unilever and McCormick’s mustard products and therefore “no realistic prospect” of competition concerns over the condiment, according to the CMA.

The CMA said Unilever and McCormick have until next Wednesday to offer solutions that might address its concerns about the lessening of competition for some food products in shops.

If the regulator is not satisfied then it will take its investigation to the next stage.

A spokesperson for Unilever said it was in talks with potential buyers for the Colman’s brand, having previously put it up for sale in a bid to address possible competition concerns.

They said: “As announced in August, a decision had already been taken to market the Colman’s brand and assets for sale to proactively address potential competition concerns.

“Discussions with potential buyers are progressing well.

“We continue to make good progress on regulatory approvals globally, reinforcing our confidence in a timely closing.”