Merger control inquiry – Muller Dairy and Yew Tree Dairy

The Competition Act 1998 (“the Act”) was enacted to stop anti-competitive behaviours and practices in the United Kingdom. Chapters I and II of the Act prohibit the abuse of a dominant market position as an anti-competitive activity. However, these prohibitions do not usually apply to mergers unless the Competition and Markets Authority (“CMA”) directs that they should.

The CMA may give this direction in two scenarios:

1. By giving written notice requiring a party to an agreement to provide certain information. If, without reasonable explanation, the party does not provide such information within a specified period (usually 10 days), the CMA can direct that the prohibitions apply
2. The CMA considers that the agreement would otherwise infringe the Chapter I prohibition and that it would not be likely to satisfy the conditions for individual exemption under section 9 of the Act.

Muller Dairy’s acquisition of Yew Tree

The CMA is currently investigating the anticipated acquisition by Muller Dairy (UK) Limited (“Muller”) of Yew Tree Diary Holdings Limited (“Yew Tree”) which raised concerns about competition in the UK dairy sector.

Legally speaking the Competition Act does not apply to merger investigations under Schedule 1 of Competition Act 1998. However this does not preclude the CMA starting an investigation into non-compete restrictions which are not considered ancillary restrictions to the merger or completely separate arrangements outside the merger.

The merger inquiry was launched on 27 August 2024 and the CMA will assess whether the merger will fall within the merger control regime introduced by the Enterprise Act 2002. If this is the case, the CMA will then consider whether this could lead to a “substantial lessening of competition” within the relevant UK markets.

The CMA invited interested parties to comment on the merger by 10 September 2024 to assist with its assessment. Now that date has passed, it will consider any representations and is set to provide ‘Phase 1’ of its decision by 22 October 2024.

Since its establishment in 1904, family-owned Yew Tree has invested heavily in its manufacturing capabilities. The acquisition will allow Muller to capitalise on this, enhancing Muller’s milk powder production and export expertise with the longer-term goal of becoming a major producer and exporter of British powdered milk products.

The acquisition comes at a time of increasing competition in the dairy sector and would strengthen Muller’s position within the market. This is likely to be a concern for milk farmers across the UK given that market competition is an important driver behind their ability to secure a fair price and to maintain diary production, particularly in remote areas. As the CMA carries out its assessment, stakeholders in the diary market will no doubt be observing the impact on market dynamics.

Over the last few years, the CMA has been proactive in investigating corporate mergers which have the potential to impact competition within the relevant market.