The CMA has provisionally found that Ecolab’s merger with Holchem could mean businesses face higher prices or a lower quality of service for cleaning chemicals.
The Competition and Markets Authority’s in-depth investigation has provisionally found that the merged organisation is likely to face limited competition from other suppliers.
The merger will create a new organisation with a market share of 40-50%, much greater than any of the remaining competitors.
The group of independent CMA panel members leading the inquiry say they have analysed a significant amount of data, including on customers and tenders which showed that they compete closely.
The Group also conducted hearings with Ecolab and Holchem and sought views from customers.
Kirstin Baker, the inquiry chair, commented: “We are concerned that as a result of this merger, prices will go up or quality standards in crucial support services will get worse. The Group has therefore provisionally concluded that the merger is likely to lead to a substantial lessening of competition.”
The CMA is now inviting comments on both its provisional findings by 27 August and its possible remedies by 13 August, including unwinding the deal.
Ecolab snapped up Holchem at the end of last year to further its offering in the supply of hygiene, cleaning products and services for the food and beverage, foodservice and hospitality industries. The business made sales of £43m in its last financial year.
In April, FEJ reported that both businesses were continuing to operate separately until the acquisition has received clearance from the CMA.