Müller's Dairy Crest fresh milk acquisition step closer to approval


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Müller's Dairy Crest fresh milk acquisition step closer to approval

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Müller is a step closer to acquiring Dairy Crest's fresh milk business after the UK Competition and Markets Authority (CMA) accepted in principle its plan to quell competition concerns. 

CMA yesterday announced it has "proposed to accept"​ an undertaking that would see Müller process a certain volume of fresh milk for one of two British dairies.

“Müller has proposed two potential dairy processors with whom it is in negotiations to enter into the processing agreement: Medina Holdings Limited and Niijar Group Holdings (Acton) Limited (trading as Freshways),”​ it said.

"The CMA proposes to accept the proposed undertaking, which it currently considers is appropriate to remedy its competition concerns."

CMA has now called for feedback on "both the suitability of these two potential purchasers as effective competitors to Müller in the supply of fresh milk to national multiples in the Severnside catchment area, and on whether the proposed undertakings are appropriate to remedy in a clear cut manner the competition concerns identified by the CMA."

The window for comment is open until August 25. 

CMA also extended the deadline for consideration by up to 40 working days until October 19.

In a statement, Dairy Crest said it expects to complete the sale before the end of the year.

"Today's announcement that the CMA proposes to accept Müller's undertakings is a positive step forward and the extended timetable still allow it to complete the sale in 2015,"​ said Mark Allen, CEO, Dairy Crest. 

"Lessening of competition"

Dairy Crest announced on November 6 2014 it had agreed to sell dairy assets, including its fresh milk business, to British rival Müller UK & Ireland for £80m. 

Muller will also acquire Dairy Crest's popular flavoured milk brand, Frijj.

Under the proposed deal, which has Dairy Crest shareholder approval, Müller would acquire Dairy Crest’s fresh milk business, flavoured milk brand FRijj, bulk and potted cream and bulk butter and milk powder businesses.

Müller will also absorb Dairy Crest processing plants in Foston, Chadwell Heath and Severnside, the company’s glass bottling site in Hanworth, and 72 depots.

An initial CMA assessment of the proposed deal concluded that the two UK dairies were the main suppliers of fresh milk in some regions of the UK.

This, CMA said, "gives rise to a realistic prospect of substantial lessening of competition in the supply of fresh milk." 

On June 12, CMA said the deal would be referred for an in-depth six-month 'phase two' investigation unless "acceptable undertakings to address these competition concerns" ​were offered.

Two weeks later, on June 26, CMA announced it was considering an offer by Müller to process a certain volume of fresh milk for a third party dairy processor in South West England and Wales.

Accepting the proposal "in principle,"​ it gave Müller until August 21 to "propose a named processor and draft arrangement to the CMA for approval."

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