Competition doubt over Northern Foods merger

A LEADING sandwich maker has raised concerns over the superior competitive clout of a merged Northern Foods and Greencore.

Brian Stein, chief executive of family-owned Samworth Brothers, said the merged group would have significant buying power, which could disadvantage rivals.

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Leeds-based Northern and Dublin's Greencore hope to merge to form Essenta Foods, a 1.7bn chilled food giant supplying the UK's big supermarkets.

Northern said Essenta would have about 45 per cent of the retail sandwich market, dwarfing third-placed Samworth's market share of about 20 per cent.

"If they end up with a 50 per cent share of the retail market that's a big share and I suspect that's getting to the stage of being a concern to the marketplace (and) to competitors," said Mr Stein. "Inevitably the bigger you become the more clout you have (and) the better you will be able to your resource your raw materials."

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Melton Mowbray-based Samworth is a big sandwich supplier to Tesco and also owns the Ginsters Cornish pasty brand.

Last week food tycoon Ranjit Boparan, who has until Friday to bid for Northern, called the mooted merger "completely wrong" and said Essenta's dominant position in sandwiches should be investigated. Northern and Greencore are understood to already have had positive talks with the Office of Fair Trading.

However, Mr Stein said he is not overly concerned as supermarkets often regulate suppliers.

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"Sometimes when you get to a particular size that can be as much of a problem as a benefit," he said. "If they (retailers) feel that somebody has too big a market share they will move that business somewhere else. When it's own label it's not your brand."

The groups argue the merger will create a stable business with "real scale" and 40m of synergies. "As we have said previously, the merger is still subject to regulatory approval but we do not anticipate competitive issues at this stage," said a Northern spokesman.

Reports yesterday claimed the Financial Services Authority was investigating suspicious share dealing by brokers prior to the Essenta merger announcement. The FSA declined to comment.

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