The UK competition watchdog has warned a proposed merger between two packaging firms could create “insufficient competition” in the market.
The Competition and Markets Authority (CMA) launched its investigation into the proposed takeover of DS Smith’s rigid and flexible packaging (plastics) division by Liqui-Box, a portfolio company of Olympus Partners, in May 2019.
After the first phase of its investigation, the CMA said Liqui-Box and DS Smith are two of the four main firms offering the specialist bag-in-box packaging to food, wine, dairy and drinks firms.
“If the deal is allowed to go ahead as planned, the CMA is concerned it could create insufficient competition in the supply of these products, leading to their customers potentially having less choice and paying higher prices, especially as there are very few large suppliers in the UK,” it said.
The CMA added it is also concerned that the reduction in competition could lead to lower quality products and poorer service.
It said that unless the merging businesses are able to address its concerns, it will launch an in-depth investigation into the acquisition.
A spokesperson for DS Smith said: “DS Smith notes today’s notification by the UK Competition and Markets Authority in relation to the sale of our plastics division to Olympus Partners [owners of Liqui-Box].
“The transaction is not conditional upon CMA approval and we continue to expect completion to occur during the second half of this calendar year.”
In March 2019, Liqui-Box, headquartered in the US, said it had agreed to acquire DS Smith’s plastics division and as a result in order to offer global customers “compelling packaging solutions and drive advancements in technology and sustainability”.
Ken Swanson, Liqui-Box’s CEO, said: “The combination with DS Smith Plastics advances our strategic initiative to create the leading innovator of sustainable flexible and rigid packaging solutions.
“This combination will be transformational for both companies and an exciting growth story for our employees and customers.”
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