Britain’s competition watchdog scrutinises Hovis deal
The UK competition regulator, the Competition and Markets Authority (CMA), has stepped up its review of a £75 million plan that would see the owner of Kingsmill acquire the sliced bread brand Hovis. The proposed takeover, announced by Associated British Foods (ABF) – the conglomerate behind Primark – would consolidate two major players in the UK bread aisle, prompting the CMA to assess whether the deal could lessen competition, harm consumers, or lead to higher prices.
What the deal entails and why it matters
ABF, already a heavyweight in the grocery and food production sector, would expand its footprint in the bread market by bringing together Kingsmill and Hovis under one umbrella. The deal signals a potential shift in market dynamics, given the brands’ strong consumer loyalty, wide distribution networks, and comparable price points. While ABF argues the merger would streamline operations and strengthen supply chains, critics warn of reduced choices for shoppers and the risk of marginalising smaller bakeries and regional players.
Competition concerns the CMA will weigh
The CMA’s core task is to evaluate whether the acquisition could lessen competition in any relevant market in the UK. Key considerations include:
- Whether the combined entity would have the ability and incentive to raise prices, reduce product variety, or degrade service levels.
- Potential barriers to entry for competitors, particularly for niche or regional bakers seeking shelf space in supermarkets.
- Impact on consumers’ access to affordable bread options and the overall competitiveness of the grocery sector.
The path forward for the deal
At this stage, the CMA has not indicated a timeline for its final decision. However, mergers of this scale typically involve a phased review process, including data submissions from ABF, market tests, and consultations with stakeholders across the supply chain. If the CMA identifies competition concerns, it could require remedies such as divestments, behavioral commitments, or other structural changes to restore competitive balance.
Industry and consumer implications
The outcome of the CMA’s investigation could shape pricing strategies, product innovation, and the breadth of choice available to households. For ABF, the deal would unlock synergies in marketing, distribution, and procurement. For consumers, the stakes include whether a broader ABF-backed platform would benefit from economies of scale or risk stifling competition in a market that already shows high household bread usage.
What comes next
Analysts will be watching closely as the CMA conducts its assessment, with potential timelines depending on the complexity of the case and the breadth of market factors considered. In the meantime, ABF has reiterated its commitment to addressing any CMA concerns and continuing dialogue with regulators to ensure the deal can proceed without compromising competition.
As UK households continue to rely on staples like sliced bread, regulators’ scrutiny over big consolidations remains a central feature of the grocery industry’s evolving landscape. The CMA’s verdict on ABF’s plan to acquire Hovis could either point toward a more consolidated market under one owner or reinforce a competitive industry structure that sustains diverse brands and fair pricing.
