Minnesota-based Ecolab’s proposed acquisition of a leading supplier of chemicals to the foodservice sector is under scrutiny over concerns it could lead to higher prices for customers.
Ecolab and Holchem announced plans to merge at the end of last year, but the deal is being investigated by the UK’s primary competition body.
The CMA said it has identified concerns that the acquisition could adversely affect food and beverage businesses as a result of higher prices or lower quality services.
This is because the pair are two of the largest suppliers of cleaning chemicals and would face limited competition from other suppliers after the merger.
New York-listed Ecolab now has until 17 April to offer a solution to the CMA’s concerns otherwise the merger will be referred for an in-depth Phase 2 investigation, to be carried out by a group of independent CMA panel members.
Ecolab snapped up Holchem at the end of last year to further its offering in the supply of hygiene, cleaning products and services for the food and beverage, foodservice and hospitality industries. The business made sales of $56m in its last financial year.
“Holchem’s strong technical capabilities and service model align well with Ecolab’s commitment to helping customers uphold stringent food safety standards,” said Sam de Boo, Ecolab’s senior vice president and general manager for food & beverage at the time of the deal. “We look forward to combining our teams to better serve food and beverage and foodservice customers in Ireland, the UK and throughout Europe.”
Both businesses are continuing to operate separately until the acquisition has received clearance from the CMA.