Merger of two major NI bakeries approved by watchdog

The UK's competition watchdog has approved the merger of two major bakeries in Northern Ireland.

The Competition and Markets Authority (CMA) has cleared the way for Associated British Foods (ABF), whose brands include Sunblest, to buy Hovis, whose brands include Ormo.

The CMA has been examining a wider UK-wide merger of the two businesses.

The merged business will have a near monopoly of some components of an Ulster Fry, controlling 80% of the NI pancake market and 60% of soda farls.

It also raises questions about how the merged business will operate in Northern Ireland.

Hovis has its bakery at Apollo Road in south Belfast while ABF's facility is on the Castlereagh Road in east Belfast.

Despite competition concerns, the CMA said the deal could proceed as ABF's Belfast operation was heavily loss-making and would inevitably close if the merger was blocked.

It had held discussions with potential buyers of the ABF business in Northern Ireland and concluded that no alternative buyer was willing or able to buy it and keep running it as a direct competitor to Hovis.

It said that therefore since a loss of competition in Northern Ireland would happen regardless of whether the merger is approved, the deal could go ahead.

Cyrus Mehta, chair of the independent inquiry group leading the CMA investigation, said: "Bread is a basic staple for millions of people, which is why it is important we looked carefully at this deal and assessed the competition implications for households across the UK.

"On the basis of the wide range of evidence we received, which showed the difficult position many UK-based bakeries are in, we found Allied Bakeries – owned by ABF – would likely leave the market entirely if the deal did not proceed.

"Taking that into account, we have concluded the deal does not raise competition concerns."