A merger of the UK’s two largest scampi suppliers could ultimately push up prices for UK pubs and restaurants, the competition watchdog has said.
The Competition and Markets Authority (CMA) has found that Whitby Seafoods’ purchase of Kilhorne Bay Seafoods could result in higher prices and lower quality products for consumers.
Whitby Seafoods is currently the largest UK supplier of breaded scampi to customers including pubs, restaurants, and fish and chip shops, holding a market share of about 90%.
Kilhorne Bay Seafoods, while significantly smaller, is the UK’s second largest supplier.
These venues are already facing significant cost pressures, and it’s critical that we don’t allow a loss of competition to make things worse— Colin Rafferty, CMA
Whitby Seafoods voluntarily notified the CMA when it agreed to buy Kilhorne Bay Seafoods in May.
The CMA launched a merger review into the deal in August.
An initial investigation found that the loss of competition brought about by the deal could result in food sector customers having to pay higher prices, which could lead to higher prices for consumers, as well as reduced product quality.
The CMA said it will refer the deal for an in-depth investigation unless Whitby and Kilhorne Bay offer solutions “which fully resolve these concerns”.
The companies have five working days to submit proposals.
CMA senior director of mergers, Colin Raftery, said: “Scampi is a popular choice when eating out in the UK, with over 20 million servings sold to restaurant, cafe, and pub-goers every year.
“These venues are already facing significant cost pressures, and it’s critical that we don’t allow a loss of competition to make things worse.
“Kilhorne Bay is a relatively small player, but Whitby Seafoods already faces only very limited competition when competing for food service customers – so the deal would leave customers facing the risk of higher prices and lower quality products.”
