AG Barr and Britvic remain confident their proposed merger will not lessen competition in the soft drinks market – despite the deal being referred to the Competition Commission.
Shares in both firms slid last week after the Office of Fair Trading (OFT) referred the deal to the competition regulator over concerns it would reduce competition between certain brands of the two suppliers.
Barr, Britvic and Coca-Cola Enterprises are the three main players in the UK soft drinks sector. The OFT said CCE brands provide an important alternative for consumers, and concluded some of Barr’s brands, which include Irn-Bru and Orangina, were sufficiently close to Britvic brands like Pepsi and Tango to gain a price advantage.
The OFT said it could not rule out the prospect of prices rising post-merger.
In a statement, Barr and Britvic said a merger would not lessen competition, and that their respective boards would reconsider a merger if clearance is granted. But reports suggest Barr may turn its attention to Ribena and Lucozade, put up for sale by GlaxoSmithKline this month.
The probe will take around six months.