Enforcement order revoked on Lakeland LacPatrick merger

AgriLand can reveal that the UK’s Competition and Markets Authority (CMA) has revoked its enforcement order, effectively ending its freeze on the merger process between Lakeland and LacPatrick.

It’s a positive indication that the deal could soon be given approval – at least on one side of the border – and has been made following an initial review of the evidence. However, it should be noted that, as a provisional view, it could still be subject to change.

However, while it’s significant progress, as cross-border businesses, the firms will also have to wait for approval from the Irish competitions authority (the Competition and Consumer Protection Commission or CCPC).

The CCPC operates a slightly different system with its order effective until full approval is granted. Speaking to AgriLand, a spokeswoman for the CCPC explained that since both firms operate in both jurisdictions they must wait for approval from both jurisdictions before continuing.

What is an initial enforcement order?

The initial enforcement order essentially stops the two companies from transferring goods, services and employees, or any other activity which would see them become one entity.

However, in the case of the two dairy processors, an exception was made to allow the sale of powdered milk from LacPatrick to Lakeland.

The initial enforcement order, which was issued on November 23, is standard practice. Putting the brakes on a merger process gives the CMA time to investigate the potential impact of any given merger before the companies become too deeply entwined.

It also makes it easier to stop the process should the CMA decide not to give the deal the go-ahead.

What’s next?

Once an order has been revoked, it allows the two firms to continue operating as if the notice had never been served – meaning they can begin the process of merging.

However, as some information was not provided to the CCPC until January 31, it has delayed the approval process in the Republic of Ireland, keeping the Irish enforcement order in place.

The CMA has until March 13 as a deadline for the first phase of its inquiry. However, it is not unheard of for approval to be given early.

After this date the CMA must give one of four decisions:

  • Full approval for a merger;
  • Progression to a second-phase investigation;
  • A block on a merger;
  • Undertakings in lieu – for example; the new firm could be asked to sell off parts of the business.

The Irish body has up to 30 working days to conclude the first phase of its inquiry, meaning it has until March 15 to make a similar decision.

A letter signed by Maria Duarte, assistant director of mergers at the CMA, explained that the authority’s primary role was to investigate whether the merger may be expected to result in a “substantial lessening of competition” in any market in the UK for goods or services.

“The CMA nevertheless considers that, based on the evidence it has received in its assessment of the transaction to date, it is appropriate to revoke the initial enforcement order,” she said.

Note: This story has been updated to reflect information from the CCPC.