Beans means trouble in HP Foods sale
Fears that the price of traditional British foods including baked beans, tomato ketchup and HP Sauce could rise has forced the Office of Fair Trading (OFT) to refer the sale of HP Foods to the Competition Commission.
Director of competition enforcement at the OFT Vincent Smith said the sale of the Danone-owned sauce business to the American giant Heinz could lead to “higher prices for products such as HP brown sauce, tomato ketchup and baked beans”. He added: “This transaction brings together two of the largest branded sauce suppliers in Britain, who compete in a number of product categories.”
The iconic condiment Heinz Ketchup is estimated to have a 79 per cent market share in Britain.
Earlier this year Heinz paid the French group Danone £470m for the HP Foods group that includes household brands such as HP Sauce and Lea & Perrins Worcestershire Sauce.
Last night Heinz said the referral was not unexpected and said it was “confident” the acquisition would meet the criteria for final clearance.
“It is not unusual for acquisitions of this magnitude to be referred to the Competition Commission to ensure that any potential concerns are addressed,” said Heinz UK President Jane Miller.
The OFT is concerned that the sauce giant created would lessen competition in the supply of tomato ketchup, brown sauce and tinned baked bean and pasta markets. HP and Lea & Perrins are the market leaders.
First quarter profits fell 19 per cent at Heinz to $157m (£88.5m). The food giant is restructuring, disposing of peripheral businesses such as frozen foods and seafood to concentrate on sauces, soups, baked beans and baby foods.
The Pittsburgh-based firm aims to grow profits by 14 per cent this year.
The HP deal has already received approval from the merger authorities in Ireland and Germany. The Competition Commission is expected to report back next April.