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Ali Group’s merger with Welbilt gives CMA “cause for concern”

Ali Group

The Competition and Markets Authority (CMA) has concluded a fast-track investigation into Ali Group’s proposed takeover of Welbilt and found that it “does raise competition concerns” in the UK.

The CMA said the merger gives it “cause for concern” but stopped short of blocking the deal while it examines a solution put forward by the two companies.

The sticking point for the deal revolves around commercial ice machines, with the CMA describing them as “two of the main suppliers of ice machines in the UK” and noting that they compete closely with each other currently.

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It emerged today that both Ali Group and Welbilt recognised at an early stage that the planned merger could create competition issues around the supply of ice machines in the UK and requested the CMA to ‘fast track’ their normal procedures so that the concerns could be addressed.

The CMA’s formal investigation – which was completed in 10 days rather than the 40 days that it usually takes – has now confirmed these concerns and found that the removal of Welbilt as an independent competitor could lead to higher prices or a lower quality service for the hospitality sector and, ultimately, customers.

The CMA will now consider whether the remedy proposed by Ali Group and Welbilt – which involves the sale of Welbilt’s global ice machine business to an independent third party approved by the CMA – will fully restore the loss of competition in the supply of ice machines in the UK that the deal would otherwise have brought about.

Welbilt has previously announced its intention to divest its ice machine brand Manitowoc Ice to Pentair in a deal worth £1.2 billion.

Colin Raftery, CMA Senior Director of Mergers, said: “Protecting competition in the supply chain is key to ensuring that pubs and restaurants don’t face unnecessary costs, helping in turn to get the best service and price possible for customers.

“Following a swift investigation, we’ll now carefully consider whether Ali Group and Welbilt’s proposals will address our concerns.”

The deal is subject to review by a number of competition authorities and the CMA has engaged closely with other agencies, including in relation to the proposed remedy, throughout its investigation.

Ali Group to sacrifice ice machine brand to get Welbilt deal over the line

Tags : Ali GroupCMAWelbilt
Andrew Seymour

The author Andrew Seymour

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