Vinegar plant sale green-lighted by the OFT

THE Office of Fair Trading (OFT) will allow Japanese-owned food group Nakano UK to sell its Burntwood vinegar plant in Staffordshire to Baxters Food Group. 

Undertakings from Nakano have been accepted in order to remedy competition concerns arising from Nakano’s completed acquisition of the vinegar and pickles businesses of Premier Foods Group Limited. As a result, the merger will not be referred to the Competition Commission (CC).

The OFT announced on 26 September 2012 that it was suspending its duty to refer the merger to the CC because it was considering whether to accept undertakings in lieu of a reference. The parties are the only two manufacturers of unbranded malt and spirit vinegar in the UK and the largest suppliers of these products to food processor customers (who use them in the manufacture of pickles and sauces), food service customers (including wholesalers and fish and chip shops) and supermarkets.

Before accepting the undertakings the OFT assessed and consulted publicly on the proposed undertakings, including on the suitability of Baxters as the upfront buyer.

The OFT says it did not receive any concerns in response to its public consultation and on the basis of the evidence before it has concluded that the undertakings are appropriate to remedy the competition concerns it has identified.

Ali Nikpay, OFT senior director and decision maker in this case, said: “The OFT was concerned that prices of unbranded malt and spirit vinegar would rise as a result of Nakano’s acquisition of Premier’s vinegar business, which resulted in a merger to monopoly for some customers.

“The sale of the Burntwood plant to Baxters restores pre-existing levels of competition in the manufacture and supply of these vinegars to UK customers.”

Nakano, part of the Mizkan Group Corporation, acquired Premier Foods’ vinegar and sour pickles business in a £41m deal.