The Competition and Markets Authority (CMA) has flagged Sonoco’s acquisition of Weidenhammer Packaging Group as posing a potential risk to fair competition.
The UK competition watchdog has pledged to launch an in-depth investigation into the takeover unless the company can provide reassurances there was no risk of higher prices or reduced quality for customers.
Sonoco and Weidenhammer both manufacture composite cans for food products such as gravy granules, chocolate powder, crisps and coffee.
But the CMA said as a result of the takeover completed in October 2014, the merged company will be the largest manufacturer and supplier of composite cans for food products in the UK. It would also represent “the only credible supplier of this type of packaging for some customers”. Only two significantly smaller producers would be likely to pose any competition, added the CMA.
“The CMA is concerned that a lessening of competition may result in higher prices or a reduction in choice or quality for customers,” the organisation said.
Sheldon Mills, CMA senior director of mergers, said: “This loss of competition may give the newly-merged company the ability to raise prices to customers and ultimately this could feed into higher retail prices for a range of everyday food products.
“Unless Sonoco offers undertakings that resolve these concerns, it will be necessary to investigate the transaction in greater detail.”