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East Anglia: Britvic and AG Barr defend merger following referral to the Competition Commission

11:53 14 February 2013

Britvic

Britvic's planned merger with AG Barr has been referred to the Competition Commission

SOFT drinks groups Britvic and AG Barr today vowed to fight an Office of Fair Trading claim that their merger could reduce competition in the industry.

The companies’ proposed £1.4billion meger has been referred to the Competition Commission after the OFT concluded that the tie-up could result in higher prices.

However, Irn-Bru and Tizer manufacturer AG Barr and Britvic, which has factories in Chelmsford and Norwich and owns brands including Robinson’s and Tango, said today they would attempt to demonstrate to the commission that there would be no substantial lessening of competition.

The announcement from the OFT shocked Britvic’s chairman Gerald Corbett, who said: “If this is industrial policy, I am a Frenchman.

“This is about two British companies getting together to take on Coca-Cola. The winners today are cracking open bottles of champagne at Coca-Cola in Atlanta, Georgia.”

The OFT ruling means the merger deal between AG Barr and Britvic has lapsed, but the companies said that if clearance was received from the Competition Commission the boards would reconsider a tie-up.

Announcing its decision, the OFT said AG Barr and Britvic were two of the three main players in the UK soft drinks market and their merger raised concerns that it could reduce competition between some of their brands.

Amelia Fletcher, OFT chief economist and decision maker in this case, said: “The soft drinks industry is an important one for many consumers in Great Britain. People spend over £9bn each year on these drinks.

“This merger will see the UK market reduce from three to two main players. Our investigation has identified competition concerns relating to this deal with respect to Barr’s IRN BRU and Orangina brands which could lead to higher prices for consumers.

‘In addition, we could not rule out the possibility of further competition concerns arising from combining the overall Britvic portfolio of soft drinks with the entire Barr portfolio. We are therefore referring the merger to the Competition Commission for an in-depth investigation.”

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