UK watchdog demands competition remedies in $65 billion Unilever-McCormick food deal

Britain's competition watchdog told food giant Unilever and US spice maker McCormick they ‌must address competition concerns in dry ingredients and mixed sauces or face an in-depth investigation of their planned $65 billion food deal.

The Competition and Markets Authority said on Wednesday the companies could offer remedies to address its concerns before a November 18 deadline ‌to avoid a detailed investigation. An in-depth review can result in a deal being cleared, cleared subject to remedies ‌such as asset sales, or blocked.

Unilever said in March it would combine its food business with Frank's RedHot and French's mustard maker McCormick to create a company worth around $65 billion in the second-largest food sector deal on record. McCormick's UK consumer business includes dry ingredient mixes and sauces ⁠sold under ​the Schwartz brand, while Unilever sells ⁠a range of food products including dry sauces and meal mixes under the Knorr, Maille and Colman’s brands.

Following an initial review, the ⁠CMA said it was concerned the deal could reduce competition in the supply of dry ingredient mixes, such as chilli con carne ​mixes, and dry sauces, such as parsley sauce, to UK retailers. The regulator said Nestle's Maggi, Premier Foods' Bisto and ⁠supermarket own-brands offer only limited competition in these markets.

The CMA also examined the supply of mustard to supermarkets but concluded that English, French and ⁠American-style ​mustard are separate markets because shoppers do not view them as close substitutes. As a result, it found that Unilever's Colman's and Maille brands do not compete closely with McCormick's French's brand and raised no competition concerns. "This is ⁠an expected step in the regulatory process, and we are working constructively with the CMA on a suitable remedy," ⁠a Unilever spokesperson said, adding ⁠it had already decided to sell the Colman's brand and assets to address potential competition concerns.

"Discussions with potential buyers are progressing well," the spokesperson said. McCormick also said it was working ‌constructively with the CMA.