CMA investigates Refresco’s $1.25 billion bid for Cott Beverages

Deal between Cott and Refresco under investigation by CMA

The UK’s Competition and Markets Authority (CMA) has found that Refresco’s proposed $1.25 billion (£935 million) purchase of Cott Corporation’s soft drinks business, which emerged last July, could create higher prices for soft drinks in supermarkets throughout the UK.

Initial investigations by the CMA into the merger, which would see Refresco, maker of drinks for Innocent and Sunny D, create the largest independent bottler in Europe and North America with a combined production volume of approximately 12 litres, did not find any competition concerns for the majority of these products.

However, the CMA has said that its concerns are regarding that both companies supply juice drinks using an aseptic process that allows them to be stored at room temperature without using preservatives, with only one other competitor in the UK supplying third parties with juice drinks using this production process. 

The CMA is concerned that, after the merger, the combined business might be able to increase prices or lower quality standards.

Refresco said this morning it is “willing to offer suitable remedies” and will fully cooperate with the CMA to address the concerns raised.

Refresco Chief Executive Officer Hans Roelofs said: “With the clearance we received earlier in the process from the US and Canadian regulatory authorities and the overwhelming support from our shareholders, we are willing to propose remedies to the CMA to address this specific issue and put us on the right track to also obtain clearance in the UK.

“We continue to cooperate with the CMA in order to progress the acquisition and work towards a successful completion.”

This is a statement which was echoed by Cott Chief Executive Officer Jerry Fowden, who added: “Other than the one product category produced by both Cott and Refresco, the CMA did not find any other competition concerns. 

“With clearance already received from the US and Canadian regulatory authorities, as well as overwhelming support from Refresco’s shareholders, Refresco, in consultation with Cott, is willing to propose remedies to the CMA to address their concerns.”

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