Chelmsford/Norwich: Competition Commission clears Britvic-AG Barr soft drinks merger

A merger of soft drinks companies Britvic and AG Barr was cleared by the Competition Commission – four months after the proposed deal lapsed.

The commission said the brands owned by Britvic, which include Robinsons, Tango, J2O and Fruit Shoot, and those of AG Barr, such as Irn-Bru and Tizer, were not close competitors and consumers would not lose out.

However, the planned £1.4billion tie-up lapsed in February because of delays caused by the Office of Fair Trading’s decision to refer the matter to the commission.

The two companies continued to work on gaining regulatory approval but Britvic indicated today that a fresh agreement was far from certain.

Chairman Gerald Corbett said: “Our company is in a different place to last summer when the terms of the merger were agreed.

“The cost savings from merging are less, we are performing better, we have new management and we have a new strategy to deliver good growth internationally, as well as in the UK.”

Britvic, which last year relocated its head office from Chelmsford to Hemel Hempstead, in Hertfordshire, last month announced plans to merge its UK and Irish operations, with the loss of up to 400 jobs.

This includes the closure of its factory at Chelmsford, accounting for around 200 of the job losses, its Pennine Spring water factory in Huddersfield and a warehouse in Belfast.

Products currently made in Chelmsford, which involve drinks in cans and glass and plastic bottles, will transfer to other sites in the UK, Ireland and France. The company also has major operations in London, Norwich and Leeds.

Today’s findings from the Commission are provisional and the two companies are barred from announcing a new merger until the final report in late July.

In February, the OFT’s decision to refer the merger drew an angry response from Mr Corbett, who said at the time: ‘’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.’’

AG Barr which is based at Cumbernauld, North Lanarkshire, has more than 1,000 employees, compared with 3,000 at Britvic.

Retail sales of soft drinks in the UK amounted to £11.2bn last year and commission deputy chairman Alasdair Smith said that, given the size of the market, it was important to examine the likely effects of the merger.

He said: “Carrying out a full investigation gave us the chance to look in detail at consumer preferences.

“These told us that most consumers tend to see Barr and Britvic brands as distinct products rather than as close substitutes for each other.

“Looking at consumer preferences and other evidence, we were able to conclude that the proposed merger was unlikely to substantially lessen competition.”