The Competitions and Markets Authority (CMA) has ordered Ecolab to sell off Holchem in order to prevent potential price rises or a lower quality of service, as a result of their merger.
Following an in-depth Phase 2 investigation, the CMA concluded that the merged organisation is likely to face limited competition from other suppliers.
Two of the largest suppliers of cleaning chemicals to UK food and drink manufacturers, Ecolab and Holchem merged in November 2018. The CMA concluded that only three players of any significant size would be left to compete against the newly merged company, which would be much larger than all the others.
The independent CMA panel members considered alternative ways to address its concerns about the merger (set out in provisional findings published in August), but has concluded that blocking the merger would be the only way to address the significant loss of competition. Ecolab must now sell off Holchem to a new owner, which must also now be approved by the CMA.
Kirstin Baker, the Inquiry’s Chair, said: “We have carried out a thorough investigation analysing a large amount of data from the companies as well as evidence collected from both customers and competitors. We concluded that these two companies compete closely and this deal could have very serious effects – prices could go up or quality standards in crucial support services could get worse.
“Having carefully considered how these issues could be resolved, we decided that only blocking the merger and requiring Ecolab to sell Holchem would address our concerns.”
Ecolab’s Chairman and CEO, Douglas M. Baker Jr., commented: “We strongly believe that the UK market would remain highly competitive following the merger and are disappointed with the CMA’s findings. We are reviewing the full report provided by the CMA in detail and will carefully consider our options and next steps. We will continue to do what is right for our customers and associates, and to expand our ability to bring the latest technologies and the highest food safety standards to the food and beverage industry.”
Further details can be found on the CMA website here.
