Refresco To Offer Suitable Remedies To UK's CMA Concerns Over Cott Deal

(RTTNews) - The U.K's Competition and Markets Authority or CMA said that it has been carrying out an initial investigation into Refresco's proposed $1.25 billion or about £935 million purchase of Cott's worldwide beverage manufacturing business. The CMA will now refer the merger for an in-depth investigation unless Refresco offers acceptable undertakings to address competition concerns. Meanwhile, Cott Corp. (COT, BCB.TO) said that Refresco, in consultation with Cott, is currently examining the details of the decision and is willing to offer suitable remedies and will fully cooperate with the CMA to address the concerns raised.

The CMA said it found that the merger of soft drink manufacturers Refresco and Cott could lead to higher prices for some supermarkets and leading household brands.

In the UK, Refresco and Cott manufacture, package and distribute soft drinks for a number of well-known brands, supermarkets and shops.

Each business produces a range of different soft drinks, which are then packaged in a variety of formats and sizes. The CMA's initial investigation into the merger did not find any competition concerns for the majority of these products.

However, both companies supply juice drinks using a special aseptic production process that allows them to be sold preservative-free and without refrigeration.

Only one other competitor in the UK currently supplies third parties with juice drinks using this production process. The CMA is therefore concerned that, after the merger, the combined business might be able to increase prices or lower quality standards.

Jerry Fowden, Chief Executive Officer of Cott, said "Other than the one product category produced by both Cott and Refresco, the CMA did not find any other competition concerns. With clearance already received from the U.S. and Canadian regulatory authorities, as well as overwhelming support from Refresco's shareholders, Refresco, in consultation with Cott, is willing to propose remedies to the CMA to address their concerns and work towards the successful completion of the acquisition."